ArvinMeritor Makes Bid for Dana
ArvinMeritor Inc., the No. 1 maker of axles for commercial trucks, offered $2.2 billion in cash for Dana Corp. in a hostile bid for the global leader in axles for sport utility vehicles, pickups and minivans.
ArvinMeritor, based in Troy, Mich., offered to pay $15 for each Dana share, 25% more than Monday’s closing price.
The combination would have the technology to make complete undercarriage and drive train systems for light trucks and commercial vehicles, ArvinMeritor Chairman and Chief Executive Larry Yost said in a statement explaining why he was taking the offer directly to Dana shareholders after the rival’s board rejected previous proposals and requests for talks.
“They have the whole underside of a car with this deal,” said John Eberhardt, a banker with New York-based investment bank Austin-Pierce Ltd., which specializes in the auto business.
Shares of Toledo, Ohio-based Dana have plunged since the late 1990s as the company’s earnings have waned amid tough competition in the auto industry. ArvinMeritor’s profit and shares also have declined.
Yost said a merger would help both firms by cutting $200 million in annual costs. He said a deal would add to earnings in the first year of their combination.
Shares of Dana jumped $4.18 to $16.20, indicating that Wall Street believes ArvinMeritor would have to raise its bid. ArvinMeritor stock fell 71 cents to $20.29. Both trade on the New York Stock Exchange.
“We’ll be creating value for Dana’s shareholders in giving them cash and a premium, and we can do it right now,” Yost said in a telephone interview.
He said ArvinMeritor approached Dana and Dana’s board June 3 and June 16 and was rebuffed each time. “We had no choice but to take this to the shareholders in public.”
Dana spokesman Gary Corrigan declined to comment and wouldn’t confirm that Dana had rebuffed a bid. The company said its board would review the offer and advise shareholders within 10 business days from the start of the tender offer.
ArvinMeritor also filed a lawsuit in Virginia state court against Dana and its board alleging that the board breached its fiduciary duties to shareholders by not considering its offer.
Dana was the 13th-largest global auto supplier and ArvinMeritor was 16th for automotive parts sales in a June analysis of the top 100 global suppliers by Automotive News. Combined, the auto parts makers would rank seventh behind Johnson Controls Inc., according to the study.
