Dana ups cash offer in hotly contested fight for Britain's GKN

LONDON, March 26 (Reuters) - Auto components maker Dana Incsaid on Monday it had agreed to increase its offer forGKN's Driveline business by $140 million in cash as itstepped up its efforts to fight off rival suitor Melrose.

Shareholders have until March 29 to choose Melrose's offerfor the whole company, or back a plan from GKN's management tosplit off the group's auto business and combine it withU.S.-based Dana Incorporated, leaving GKN focused on aerospaceparts.

GKN said under the new proposal it would now receive $1.77billion in cash after deducting $1.0 billion for the transfer ofpension deficit to the combined Dana-GKN Driveline group. Italso plans to return up to 700 million pounds of cash toshareholders as soon as possible.(Reporting by Kate Holton; editing by Guy Faulconbridge)