ArvinMeritor Reacts to Dana's Rejection of Bid

| April 07, 2005

ArvinMeritor indicated it would consider a higher offer to acquire Dana Corp. if Dana would resolve its concerns over the deal. Dana recommended that shareholders turn down ArvinMeritor’s offer of $15 per share.

“Despite the fact that the Dana board has rejected our all-cash tender offer and refuses to negotiate with us, we are committed to this transaction,” ArvinMeritor said in a July 22 statement.

If Dana’s board of directors would work to resolve the proposed acquisition quickly, “we may be prepared to analyze further whether a higher value is warranted,” ArvinMeritor stated. It added that it was “flexible in considering a mix of cash and stock consideration if it will facilitate this transaction.”

The Michigan-based firm offered $15 per share on July 9 in an unsolicited cash offer that will expire Aug. 28. That was a 56 percent premium over Dana’s closing price June 3, the last trading day before ArvinMeritor submitted its first proposal. The proposed purchase has an equity value of $2.2 billion and an additional $2.2 billion for assumption of debt.

The Ohio-based Dana described the smaller rival’s bid as a “financially inadequate, high-risk proposal.” Dana’s restructuring has yielded positive results not reflected in the current stock price, it said.

If the bid were accepted, the deal might not be completed because it is financially risky and raises “serious anti-trust concerns,” Dana said. The two companies are the only major North American producers of axles, drive shafts and foundation brakes for medium- to heavy-duty trucks, which Dana said combined would total a market share of more than 80 percent.

Dana also charged that ArvinMeritor had not entered into agreements to obtain the necessary financing. Financing the proposal would place ArvinMeritor in an 88 percent debt-to-capital ratio, it stated.

ArvinMeritor said Dana’s reasons to oppose the sale could be resolved.

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