Dana Agrees to Buy GKN’s Driveline Unit

Dana Inc. has agreed to buy GKN plc’s automotive business and form a new company called Dana plc. GKN will retain its aerospace business.

The $6.1 billion deal, which had been rumored for the last week, would fend off a hostile takeover for all of GKN by U.K.-based Melrose Industries plc. The sale awaits approval by GKN shareholders and could trigger Melrose to raise its bid, which is valued at £7.4 billion ($10.2 billion).

Under the proposed merger, GKN will receive $1.6 billion in cash and Dana will assume about $1 billion of pension liabilities. GKN's shareholders will receive 133 million shares in Dana plc, valued at $3.5 billion and representing about 47% of the new company. Dana shareholders will own the remaining 53%.

Dana plc will continue to be headquartered in Maumee, Ohio, but be domiciled in the U.K. for tax purposes. Dana CEO and president James Kamsickas will head the new company and Keith Wandell will continue in his role as non-executive chairman.

The deal would create the transportation industry’s largest driveline supplier with annual sales of more than $14 billion. Dana says the merger will provide as much as $235 million cost savings per year by 2021.​​​​​