Dana Corporation, in the midst of fending off a hostile takeover effort by rival ArvinMeritor, has declared a six-fold increase in its quarterly dividend, according to Reuters.
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The report said Dana’s move is likely to make ArvinMeritor’s job of convincing the merits of its offer tougher as Dana said its higher dividend was based on confidence in the “company’s performance and direction”.
Reuters said Dana, which has already asked shareholders to reject ArvinMeritor’s offer because it would not provide enough value, raised its dividend to 6 cents a share from 1 cent.
ArvinMeritor has so far offered $US15 per share in cash, valuing Dana at $2.2 billion, while ArvinMeritor also would assume $2.2 billion in debt, but Dana shareholders have so far shown little enthusiasm and as of October 2, when ArvinMeritor extended the offer by another month, only 2% of Dana’s shares had been tendered, Reuters said.
Reuters noted that analysts have said Dana’s shares have traded above the $15 mark for most of the time since ArvinMeritor launched its bid in July, on anticipation of a higher offer.
