ArvinMeritor on Wednesday formally launched its hostile tender offer for bigger rival Dana Corporation, Reuters reported. The news agency said that ArvinMeritor launched the cash tender offer at $US15 per share valuing Dana at $2.2 billion and the tender will remain open until August 28.
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A Dana spokesman told Reuters the company would respond to ArvinMeritor’s offer within the next 10 business days.
According to Reuters, several analysts believe that ArvinMeritor will have to raise its offer to within the $18-$20 range. Dana’s management had also said on Tuesday that they valued the company within that range, Reuters added.
Reuters said that Prudential analyst Michael Bruynesteyn warned that ArvinMeritor could face hurdles in its attempts, including a ‘poison pill’, and the management team could be reluctant to cede control of the company.
“We do not see other bidders stepping in, at least not from the industry,” Bruynesteyn reportedly wrote in a research report. “We expect any increase in the $15 bid to be driven by Dana management’s negotiating skills,” he said, according to Reuters.
ArvinMeritor would also have to tackle a potential antitrust issue that may arise out of overlaps in the companies’ positions in heavy truck axles, analysts told Reuters though, overall, few expect too many plant closings despite the overhang of excess capacity over the automotive parts sector.
Reuters said that, if ArvinMeritor can pull off the deal, it would help the company broaden its portfolio of products, make them cheaply and ultimately satisfy hopes of US based vehicle makers who have recently been looking to source their parts needs from fewer and fewer suppliers.
Meanwhile, Reuters added, Gabelli Asset Management, the third largest shareholder in Dana, revealed in a SEC filing on Wednesday that it owns 5.06% of the company.
Reuters noted that Alliance Capital Management, with 11%, is the single biggest shareholder in Dana followed by Lord Abbett & Co. with 6.6%.
