With a pending deadline for GKN shareholders to determine the future of their company, Dana Incorporated (NYSE: DAN) outlines below why it firmly believes its proposed combination with GKN Driveline offers superior value to GKN shareholders.
Only this combination offers:
Significant Shareholder Value
- Increased cash payment by 8.6 percent to £1.28 billion ($1.77 billion) to GKN plc – a 2 percent overall improvement on the original aggregate deal terms – enabling GKN to make a £700 million initial payment on its stated £2.5 billion cash distribution plan;
- £2.5 billion ($3.5 billion) of immediate value through the issuance of approximately 133 million shares of Dana plc, representing a 47.25 percent stake in the combined business, with substantial sharing in future upside;
- Ongoing payment of Dana’s current quarterly dividend of 7.2 pence (10 cents) per share to the enlarged shareholder group post-combination; and
- Dana share repurchase program doubled to £145 million ($200 million) – a testimony to Dana caring about its stakeholders.
Greater Upside Opportunities
- Synergies – Unlocking £174 million ($235 million) in operational synergies achievable only as a result of combining two mobility driveline companies. Top-line synergies achievable by cross-selling each businesses’ light-vehicle products or selling GKN’s products into Dana’s commercial-vehicle and off-highway end markets will be in addition to this amount. Given Dana’s successful transformation history, we are the partner that is uniquely positioned to aid GKN Driveline’s existing team in delivering targeted stand-alone efficiencies.
- Growth – Establishes the largest global supplier of vehicle drive systems, which we expect will lead to profitable growth similar to Dana’s performance of 19 percent growth over the past two years.
- Electrification – By combining GKN’s extensive eDrive passenger car business with Dana’s extensive eDrive truck portfolio, the combined company will be positioned for driveline electrification leadership for decades to come.
Low Execution Risk
- CFIUS Risk Elimination – Dana has a clear timetable for approval, with no CFIUS risk, and customary regulatory approvals leading to expected completion by the end of the third quarter of this year.
- Mobility Acquisition Experience – Over the past 24 months, Dana has successfully acquired four companies in the mobility industry, achieving synergy targets ahead of schedule in all cases.
- Pensioners Risk Elimination – Eradicates IAS 19 deficit at the remaining GKN businesses and ensures the U.K. scheme is fully funded and supported by an additional guarantee.
- Shareholder Liquidity – GKN shareholders’ monetization widely accessible through public listings on both the London Stock Exchange and New York Stock Exchange.
A Proven Management Team
- Leadership – Dana’s senior leadership team includes a CEO with more than a decade of transformational leadership, having executed more than a dozen successful acquisitions in the extremely complex and sophisticated mobility industry.
- Customer Relationships – Customers have choices who they source new business to, or not. Dana brings the trust, relationships, and capabilities required to provide extremely complex, safety-oriented driveline systems. GKN Driveline customers already know Dana, since they possess longstanding customer-supplier partnerships with Dana.
- Country and Market Knowledge – GKN Driveline has facilities in 30 countries. Dana already operates in 90 percent of those same countries – and in many cases has done so for decades. This dramatically reduces integration risk, thus increasing synergy realization and customer satisfaction.
- Employees – Without the best people, companies fail. Dana has the capability of assessing and developing the technical capabilities of associates to ensure it has the best people on the team to perform at the extremely high levels required in the sophisticated mobility industry.
- Safety – Protecting the health and safety of people is paramount. Dana brings more than a century of experience in designing, engineering, validating, and manufacturing safety-critical vehicle driveline systems.