Dana claims takeover would raise antitrust issues

8/22/2003

LYNCHBURG, VA. - ArvinMeritor Inc.'s hostile $4.6 billion takeover bid for rival Dana Corp. raises substantial antitrust issues that ArvinMeritor has yet to address, Dana said in a new federal court filing yesterday.

Toledo-based Dana made the claim in response to a lawsuit filed by ArvinMeritor in U.S. District Court in Virginia - where Dana is chartered - a month ago.

There is a significant overlap in business at the two automotive suppliers, and that is likely to bring intense scrutiny from government regulators, Dana said. And it said ArvinMeritor has yet to provide any disclosures regarding competition in its public filings.

“Instead, ArvinMeritor's chairman and chief executive officer Larry Yost has publicly stated, with no basis, that `We'll be able to get all of the regulatory approvals that are necessary,'” according to Dana's filing.

ArvinMeritor, a Troy-based supplier of shocks, struts, suspensions, and exhaust systems, last month launched a tender offer of $15 a share in cash for all outstanding shares of Dana, its larger competitor.

Dana's board rejected the proposal, saying it was financially inadequate and a high-risk proposition.

A Dana spokesman declined to comment on the suit last night.

ArvinMeritor said in a statement that it would submit the bid to antitrust regulators “shortly.”

The company has said it believes the marriage makes sense in today's increasingly competitive and global automotive supplier business.

ArvinMeritor sued Dana in U.S. District Court in Virginia three weeks ago, saying Dana made “material misrepresentations” in a filing explaining its rationale for rejecting the takeover bid.

Dana shares have been trading above the offered price, leading to speculation that ArvinMeritor may need to raise its offer. The tender offer is open until midnight Aug. 28.

In trading Thursday on the New York Stock Exchange, Dana shares fell 3 cents to close at $15.37, on volume of 630,900 shares, while ArvinMeritor shares rose 18 cents to $19.20, on volume of 272,000 shares.