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Published: Thursday, 8/28/2003

On deadline day, analysts expect higher bid for Dana

BY JULIE M. McKINNON
BLADE BUSINESS WRITER

If Wall Street sentiment in the past seven weeks is any indication, ArvinMeritor Inc. will have to raise its $15-a-share hostile takeover offer to shareholders before it even can get near Toledo's Dana Corp.

Dana's stock price has dipped below the $15 mark on just two days since the Troy, Mich., rival announced on July 8 its unsolicited $4.6 billion deal. That is a clear indication that Wall Street thinks the offer is undervalued and another suitor might appear.

The offer expires at 5 p.m. today, but even ArvinMeritor has said it is likely to be extended.

“I definitely think they will have to raise their bid,” said Marc Santucci, supplier industry analyst with ELM International Inc. in East Lansing, Mich. “I can't imagine that, with the price where it is, people are going to tender their shares.”

He added: “Usually the first bids, especially in a hostile takeover, are not the last bids.”

Dana's stock closed yesterday down 5 cents at $15.35 a share on the New York Stock Exchange.

ArvinMeritor has said it is likely to extend its offer to buy shares until several conditions are met, including securing financing and regulatory clearance, neither of which is in place. Further, it hasn't removed Dana's anti-takeover measures, another major condition of the offer.

A spokesman for ArvinMeritor declined to comment yesterday on whether the company will raise its bid or make other moves today or tomorrow. It has repeatedly stressed, though, it would consider raising the cash offer or include stock if it can negotiate a deal.

ArvinMeritor said it will announce by 9 a.m. tomorrow whether it will extend the bid, according to its tender offer. Dana directors have advised shareholders not to accept the offer.

Some analysts have speculated the offer for Dana will end up around $20 a share and potentially include stock. Another supplier or a buyout firm could enter and drive up the bidding, some have said.

Mr. Santucci of ELM International said ArvinMeritor may go up to $17 a share. Any deal would be mostly in cash because not everyone agrees the combination would be a good one and wants stock in the resulting company, he said.

Shareholders who have tendered their stock to ArvinMeritor, meanwhile, can withdraw their agreement to sell after Sept. 6 if the company does not buy them, according to the tender offer. A later date may apply if the offer is extended, it said.



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