Dana CEO to meet GKN shareholders in London as battle with Melrose heats up
The race for engineering giant GKN is reaching fever pitch, as the chief executive of US axle firm Dana has come to London to meet top GKN shareholders.
James Kamsickas is in the capital to persuade investors to back a $6.1bn (£4.4bn) tie-up between Dana and GKN’s automotive business, as opposed to an £8.1bn takeover proposed by turnaround firm Melrose Industries, according to Reuters.
The Dana deal has the backing of GKN’s management, who have been fighting off hostile approaches from Melrose. The turnaround firm is offering investors 81p per share plus a 60 per cent stake in the company.
Meanwhile under the GKN-approved plan, investors would grab a 47.25 per cent stake in the newly merged Dana and GKN would receive $1.6bn. Investors would retain their stakes in GKN's remaining aerospace business, and benefit from the company's plan to return £2.5bn by selling off bits of the business.
As Kamsickas prepared to make his rounds, GKN and Melrose continued the mud-slinging today – this time over pensions.
After GKN’s pension scheme trustees accused Melrose last night of failing to address their “key concerns”, GKN’s board added today that the announcement “exposes the misleading statements made by Melrose”.
“The trustees’ statement illustrates that, unlike Melrose, GKN has properly addressed the pension issues facing the company and, as we eliminate the UK deficit, we look forward to our aerospace business further re-rating in line with its peers,” said GKN’s chief executive Anne Stevens.
Melrose’s Christopher Miller hit back, saying the firm was in continuing “constructive discussions” with the trustees and was an “exemplary custodian of pension schemes”.
Credit ratings agencies meanwhile downgraded GKN amid the announcements.
Fitch placed the business on “rating watch negative” saying a shedding of the automotive division could materially change its credit profile. Moody's warned that though the combination of the automotive business with Dana would delever GKN, it would "weaken its business profile".