LONDON (Alliance News) - Dana Inc is looking to convince GKN PLC investors to back its USD6.1 billion agreement to merge with GKN's automotive business rather than accept Melrose Industries PLC's hostile GBP8.1 billion bid to buy all of GKN, the Financial Times said Wednesday.
Dana Chief Executive Officer Jim Kamsickas began a two-day tour of GKN's investors on Tuesday, the day after Melrose raised its bid for the whole of GKN to GBP8.1 billion from GBP7.4 billion prior.
The Financial Times reported that Dana Finance Director Jonathan Collins had said a secondary listing in London was "absolutely an option" if GKN investors required it to support its deal.
On Friday, the FTSE 100-listed engineering firm GKN agreed to merge its Driveline business with Dana to create a new UK company listed solely in New York to be called Dana PLC.
GKN shareholders would receive 47.3% of the share capital of Dana PLC after completion. Based on Dana Inc's USD26.20 share price as of the market close Thursday, this is equivalent to a USD3.5 billion stake in the new firm.
GKN also would receive USD1.6 billion in cash. This is after deducting USD1.0 billion for a transfer to a pension scheme to reduce its deficit. In total, the enterprise value of the deal is USD6.1 billion, compared to the current market capitalisation of GKN as a whole of GBP7.42 billion.
GKN made the move to fend off the hostile offer from Melrose to buy the whole firm, which was bulked up to GBP8.1 billion on Tuesday. The increased bid, one investor told the Financial Times, had made the decision between the two offers "very close".
Dana's Kamsickas and Collins told the Financial Times they were in London to "listen to shareholders' concerns" regarding some UK institutional investors being unable to hold Dana's shares after the deal as they would be listed in the US. As a result, investors feared they would not be able to benefit from the combination.
Collins explained it was important to get "perspective on what may be a constructive way to solve that problem". Dana were seeing whether investors would "prefer a secondary listing or is there another mechanism that would be preferable to them", Collins said.
For investors with a UK mandate, however, a secondary listing would not solve the problem, the Financial Times reported. Nonetheless, a primary listing for the new Dana PLC would not make sense as liquidity is better in the US and the listed automotive sector is strong in that country.
Shares in GKN were 1.1% higher at 434.60 pence on Wednesday, while Melrose was 1.3% higher at 218.40 pence.
https://www.ft.com/content/73bf865c-26e3-11e8-b27e-cc62a39d57a0
