GKN PLC Share News (GKN)

LONDON (Alliance News) - Melrose Industries PLC on Monday lowered the acceptance condition for its GBP8.4 billion hostile takeover bid for GKN PLC and urged shareholders of the engineering company to accept its offer.

GKN, separately, confirmed that the newly enlarged Dana firm will be listed on both the New York and London Stock Exchange. The company earlier in March agreed to combine its automotive business Driveline with New York-listed engineering firm Dana Inc in a USD6.1 billion deal.

Melrose, which has raised its offer for GKN to GBP8.4 billion from the initial GBP7.1 billion announced in January, said its final offer of 466.00 pence per GKN share is a superior alternative to what is considered a "hasty break-up" that the FTSE 100-listed engineering firm is pursuing.

The turnaround specialist also said that after GKN's planned disposals, its aerospace division would become overburdened with up to GBP3.00 billion of volatile gross pension liabilities, equal to three times its trading profit.

Melrose also said the proposed sale of GKN's Driveline would value the business at GBP800.0 million less than the valuation GKN itself gave the business on February 15.

The firm said its offer avoids the diminution of value, heighten pension and de-rating risk. It has lowered the offer acceptance condition to 50% plus one share from 90%, with the deadline set for March 29.

In addition, Melrose confirmed that it has made a proposal to the GKN Pension Scheme Trustees, to contribute up to GBP1.00 billion into the fund if the takeover goes ahead.

"GKN's series of hastily-assembled and ill-considered proposals destroy potential value and add significant risk, not just for shareholders but in the underlying businesses themselves. By accepting the Melrose offer, GKN shareholders will keep the potential value of all the GKN assets as majority owners of a much larger business and a management team with a clearly superior track record," said Chairman Christopher Miller.

"Unless they accept our offer, GKN shareholders will end up with shares in an Aerospace business overburdened with up to GBP3 billion of pension liabilities upon the planned disposals, and a minority shareholding in a Dana-managed Driveline business without a UK primary listing, which many won't be able to hold," Miller added.

Shares in Melrose Industries were down 1.1% at 221.80 pence in early trade. GKN shares were up 0.9% at 430.84p.