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Dana merges with Driveline division of GKN

Dana Incorporated and the Driveline division of GKN plc have signed agreements to merge and become Dana plc.

The total consideration includes $1,6 billion in cash proceeds to GKN plc, the assumption of approximately $1 billion of net pension liabilities, and 133 million new Dana plc shares issued to GKN’s shareholders, valued at approximately $3.5 billion.

Dana shareholders will own approximately 52.75 per cent of the company with GKN shareholders owning 47.25 per cent under the agreement’s terms.

The move is set to see the company become a global leader in vehicle drive systems across light vehicle, commercial vehicle, and off-highway markets.

The new entity will be able to provide global coverage which will strengthen the company’s presence in China and is expected to have a strong balance sheet with a result of $235 million annual cost synergies within three years and be accretive to earnings in the first full year, according to Dana.

“This transformative and strategic transaction solidifies Dana as a world leader in vehicle drive systems and establishes a leading position in electric propulsion, which we see as the future of vehicle drivetrains,” president and CEO of Dana James Kamsickas.

“We have a long history of partnering with GKN, and the companies possess similar cultures and exceptionally talented people. Our highly complementary businesses share a deep understanding of our customers’ long-term requirements. We look forward to welcoming GKN Driveline into the Dana family and to delivering value and growth to our shareholders.”

GKN Driveline has approximately 35,000 employees, with operations in 23 countries and 61 manufacturing locations, including one of the largest driveline businesses in China. In 2017, the business generated consolidated sales of approximately $6.2 billion.

Executive vice president and chief financial officer of Dana Jonathan Collins said the transaction will result in a much stronger Dana, both strategically and financially.

“In the near-term, we expect our business to achieve best-in- class returns on capital and continue on the path to an investment grade credit profile,” he said.

Dana expects to complete the transaction in the second half of 2018.

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