GKN PLC Share News (GKN)

By Ben Martin

LONDON, March 29 (Reuters) - The three-month battle for GKNwill be decided on Thursday when the deadline for shareholdersto accept Melrose Industries' 8 billion pound ($11 billion)hostile bid expires, ending one of the most closely-contestedtakeover fights in Britain for years.

Investors in engineer GKN have until 1200 GMT toback Melrose's cash-and-shares offer for the aerospaceand automotive parts supplier. Melrose, a UK-based industrialturnaround specialist seeking to buy a much bigger firm, has setthe acceptance level for its bid at 50 percent plus one share.

Failure of the offer would pave the way for GKN to pressahead with an alternative deal it struck with U.S. axles anddriveshafts maker Dana earlier this month as part of itsdefence against Melrose's hostile approach.

GKN has proposed merging its automotive business, whichsupplies components to companies including Volkswagen, with Danain a cash-and-shares tie-up that is dependent on the Melrose bidfalling away.

To convince shareholders to reject Melrose, GKN has alsopledged to find a buyer for its powder metallurgy business andreturn as much as 2.5 billion pounds to investors.

Along with the Dana transaction, this would reshape GKN tofocus on its aerospace operations, which supplies parts for theBlack Hawk military helicopter and Eurofighter Typhoon.

Both the Melrose and Dana deals would mark a pivotal momentin the history of GKN, which traces its roots back more than 250years and which produced Spitfire planes during the Second WorldWar. The takeover attempt by Melrose, Britain's biggest hostilebid since Kraft pounced on Cadbury in 2009, has attractedwidespread scrutiny, including from lawmakers and unions.

So far, two of GKN's largest shareholders have come out onopposite sides, and analysts say the result could be close.

Melrose sweetened its bid on March 12 to offer 1.69 newMelrose shares and 81 pence in cash for each GKN share, whichwould hand GKN investors 60 percent of an enlarged Melrosefollowing the deal. The proposal currently values GKN shares atabout 458.4 pence each.

The Dana transaction, meanwhile, would give GKN shareholdersa 47.25 percent stake in the New York-listed company. Dana hasalso said it will secure a listing in London as part of itsproposed merger with GKN's autos business.

"Over the last three months, it has become clear to GKN thatMelrose's attempts to engage with a broad group of GKN'sstakeholders – its customers, its employees, its pensioners,regulators such as CFIUS and most recently the UK government –have been hurriedly conducted and demonstrate a lack of care andpreparation," GKN's chairman Mike Turner said on Wednesday.

Meanwhile, Christopher Miller, Melrose's chairman, said hiscompany had "repeatedly over-delivered on its promises and isoffering GKN shareholders an immediate and certain value inaddition to a 60 percent majority of the considerable upside."

GKN shares closed down 1.7 percent at 423 pence onWednesday. Melrose's ended down 0.2 percent at 223.3 pence.

($1 = 0.7089 pounds)(Reporting by Ben Martin; Editing by Mark Potter)