Melrose increases offer for GKN to £8.1bn

Melrose specialises in buying industrial companies before improving them and selling them off

The board of FTSE 100 engineering firm GKN has rejected a "final offer" worth £8.1bn in a hostile takeover attempt by Melrose.

GKN previously rejected an offer made in January, where Melrose offered a £7.4 billion bid.

Melrose has said this will be the final offer as the acceptance deadline draws near.

GKN announced the terms of the Driveline deal last week which would see Dana shareholders own 52.75% of the company and GKN the remainder, with the combined company set to be domiciled in the United Kingdom but traded on the New York Stock Exchange.

Under the new terms of the proposed deal, Melrose, a London-based company which invests in firms with a view to improving their financial performance, will pay GKN investors 81 pence in cash for every GKN share they hold, plus1.69 new Melrose shares.

"Private UK shareholders should also be aware that they would be liable to income tax on the value of any new Dana shares they receive". Accept its bid and it could all be over...

The board of GKN has been battling to convince shareholders that it can create more value for them with its own plan for the company since Melrose first approached it in January.

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GKN last week agreed to sell its automotive unit to USA -based Dana Inc.in a $6.1 billion transaction aimed at repelling Melrose.

UK Tier One aircraft components supplier GKN has rejected a second takeover bid from turnaround specialist Melrose.

He added: "Melrose believes that this hasty and ill-thought-through transaction is prejudicial to GKN's shareholders". The move came after the blue-chip company agreed a deal last week to merge its automotive division with Dana.

But it was left vulnerable to bid approaches after two profit warnings late previous year, caused by problems at its USA aerospace business. It would result, Melrose explained, in the sale of GKN's Driveline business before any improvement "that all parties agree is achievable".

GKN employs around 6,000 people in Britain - about 10 percent of its workforce.

Melrose told lawmakers earlier in March that it would consider making binding commitments about the future of GKN should its bid succeed.

The deal with Dana "provides significantly greater value for GKN's shareholders than the Melrose offer", GKN said.

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