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Sunday 15 July 2018

GKN in talks with Dana over automotive tie-up

GKN said it has received a number of approaches and has engaged in discussions with Dana.

GKN (Andrew Matthews/PA)
GKN (Andrew Matthews/PA)

By Ravender Sembhy, Press Association City Editor

Takeover target GKN has confirmed it is in talks with US firm Dana over a potential merger of its automotive business, as it continues to fend off a hostile bid from Melrose Industries.

GKN said in a stock market update that it has received a number of approaches and has engaged in discussions with Dana “regarding a potential combination of Dana with GKN Driveline that would be effected mainly in equity”.

Dana specialises in car part manufacturing.

The news comes days after GKN firmed up the timings on “Project Boost” – its plan to persuade investors not to back Melrose’s £7.4 billion bid – saying a proposal to separate GKN Aerospace and GKN Driveline into two listed companies would be set for mid-2019.

“The board of GKN considers that the Company has world leading businesses that offer significant upside potential through the execution of Project Boost.

“However, it believes that the possible transaction under discussion could provide greater value to shareholders and should therefore be explored alongside the demerger, as compared with the Melrose offer which has been rejected by the board as fundamentally undervaluing the company and its prospects,” GKN said on Friday.

The Driveline division booked £377 million in profit last year on revenues of £5.3 billion.

GKN, which employs around 58,200 staff, has become a target after profit warnings in October and November following problems at its US aerospace division sent shares tumbling.

Melrose was handed a double boost on Monday when its swoop for GKN won regulatory backing in the US and Canada.

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