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GKN wants to combine its Driveline business with Dana
GKN plc announces that the company has reached an agreement with Dana Incorporated on the proposed combination of GKN’s Driveline business and Dana to create a combined company.
On 12 January 2018, GKN announced that it intended to separate its aerospace and automotive businesses and later confirmed that the company had entered discussions with Dana regarding a potential combination of Dana with GKN Driveline.
Now the companies have reached an agreement under which GKN’s shareholders will receive 47.25% of the fully diluted share capital of Dana plc at completion of the transaction. Based on Dana’s fully diluted share capital and closing share price as at 8 March 2018 of $26.20, this equates to a value of $3.5 billion.
The Proposed Transaction values GKN Driveline at a total enterprise value of $6.1 billion.
“This combination of GKN Driveline and Dana will create a US and UK led global market leader in vehicle drive systems. The synergies between these two businesses and our complementary product portfolios make this a great deal for GKN shareholders,” Mike Turner, Chairman of GKN, says in a press release.
The GKN board believes the this transaction, together with the prospects for GKN Aerospace, provides significantly greater value for the company’s shareholders than the offer from Melrose, which evertiq reported on.
Following the transaction, GKN shareholders will own 47% of a $14 billion revenue, global automotive group and will retain ownership of GKN’s outstanding remaining businesses.
“The Board believes that this strategy is far more attractive for GKN shareholders than the Melrose proposal which fundamentally undervalues GKN and therefore the Board unanimously recommends that GKN shareholders reject the Melrose proposal and vote in favour of the proposed combination with Dana,” Mike Turner adds.
GKN Aerospace will continue to implement its new strategy, and following the divestment of Powder Metallurgy and other non-core businesses, GKN Aerospace will become a standalone aerospace company.
“This transformative and strategic transaction solidifies Dana as a world leader in vehicle drive systems and establishes us a leading position in electric propulsion, which we see as the future of vehicle drivetrains. We have a long history of partnering with GKN, and the companies possess similar cultures and exceptionally talented people,”James Kamsickas, President and Chief Executive Officer of Dana, says in the release.
