Dana Inc. to buy 52 percent of U.K. firm

3/9/2018

 

In a move that would more than double the size of the company, Dana Inc. announced plans Friday to acquire the driveline business of a British company that is battling a hostile takeover bid.

The Maumee-based auto-parts manufacturer said it reached a $6.1 billion deal to merge its operations with the Driveline division of GKN plc.

The agreement calls for $1.6 billion in cash proceeds to GKN plc, GKN shareholders to receive about 47 percent stake in the newly-formed Dana plc for stock shares valued about $3.5 billion, and for the new combined company to assume about $1 billion in GKN’s pension liabilities.

Dana President and CEO James Kamsickas said the axles and driveshafts of GKN nicely complement Dana’s drivetrain manufacturing while solidifying operations for the growing electric driveline business.

“This is the largest acquisition in the history of Dana and everybody knows the history of Dana,” Mr. Kamsickas said. “We look forward to welcoming GKN Driveline into the Dana family and to delivering value and growth to our shareholders.”

GKN, with origins that can be traced to 1759 when it began as Dowlais Iron Co. in South Wales to supply rails to railways, was the target of an unsolicited takeover bid by Melrose Industries, a manufacturing turnaround firm.

Reuters reported Melrose had been pursing GKN since January, when the engineering group spurned its unsolicited cash-and-shares bid that at the time valued GKN at about $10.2 billion.

GKN’s driveline operations include 61 manufacturing locations, employing about 35,000 people in 23 countries. The company had about $6.2 billion in sales in 2017.

Shares of Dana stock rose 3.59 percent to close at $27.14 on Friday.

In announcing the purchase, Dana said the combined company will be domiciled in England as Dana plc. and two directors from GKN will join Dana’s board.

Mr. Kamsickas confirmed Dana’s operating base will stay in place. He said the company will continue to trade on the New York Stock Exchange.

“In the big picture nothing changes. Our world headquarters will still be in Maumee,” he said. “The most important thing is this brings some additional products into our portfolio.”

GKN’s driveline business of parts and systems is focused on passenger cars and light trucks with offerings in battery electric and hybrid technology. It has one of the largest driveline businesses in China via its joint venture, Shanghai GKN Huayu Driveline Systems.

Dana’s vehicle drive systems range from light vehicles and commercial trucks to construction, agricultural, and mining equipment, and its business is currently more focused on North America and Europe.

“This is really a complementary arrangement,” said Stephanie Brinkley, an analyst at the firm IHS. “There is some overlap, but not very much. They both work on electrification but in different ways. They both have opportunities in that space, and that is one that is poised for significant growth.”

The acquisition must undergo shareholder approval by both companies as well as Federal Trade Commission review.

The Fortune 500 company, which had about $7.2 billion in sales in 2017, employs about 30,000 people in 33 countries. In addition to the headquarters, Dana has its primary tech center in Maumee.

Also, the new Dana Toledo Driveline Facility, a 300,000-square-foot plant built in the Overland Industrial Park, recently began production of axles for the next-generation Jeep Wrangler. It now employs about 200 people, but is expected to grow to at least 350 by 2020.

Contact Mark Reiter at: markreiter@theblade.com or 419-724-6199