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Melrose Industries extends deadline for GKN offer
Turnaround specialist Melrose Industries said on Friday that the deadline for its £7.4bn hostile offer for engineer GKN has been extended until 29 March.
GKN has been engaged in a bitter battle with Melrose since it made its hostile approach to the company back in January, dismissing the bid as "derisory" and saying it "fundamentally undervalues" the group and its prospects.
Chief executive Anne Stevens accused Melrose of trying to buy the company "on the cheap" just at the point when the engineer was starting to reap the benefits of its long-term investments.
Melrose's deadline extension came just hours after GKN announced that it has agreed to combine its automotive business, Driveline, with US-based Dana in a deal valued at around $6.1bn.
Under the terms of the agreement, which GKN said represents an acceleration of its strategy to separate its aerospace and driveline businesses, the company will receive cash proceeds of $1.6bn. GKN's shareholders will also receive 47.3% of the fully diluted share capital of the newly formed company, Dana plc, at completion of the proposed transaction.
The engineer said the deal brings together two "highly complementary" businesses and creates a global leader in vehicle drive systems across all three mobility markets - light vehicle, commercial vehicle and off-highway.
The companies expect to achieve annual run-rate synergies of $235m (£170m) by the end of the third year following completion of the deal. This is in addition to the GKN Driveline benefits expected as part of Project Boost.
On Thursday, Melrose said it had received shareholder approval and European Commission anti-trust clearance for the deal.
At 1520 GMT, Melrose shares were up 3.5% to 223.70p while GKN was 2.9% firmer at 433.70p.