ArvinMeritor has launched a $2.2 billion hostile takeover bid for Dana Corp.
The company said it is taking the $15 per share offer directly to shareholders after approaches to Dana's board were rejected.

"It probably comes as no surprise to anyone that we've watched Dana very closely for some time now," said ArvinMeritor Chairman and CEO Larry Yost in a teleconference with financial analysts. In the spring of 2001 Yost said the two companies had extensive discussions about combining their aftermarket business. Those discussions never reached closure but "they convinced us that there was a lot to be gained by combining our two businesses."
According to Yost, early in June Dana's board of directors refused to discuss a cash offer of $14 per share which he said represented a premium of 45%. A second attempt to open negotiations was rejected later that month. ArvinMeritor has filed a lawsuit against Dana and its board of directors asserting, among other things, that Dana's board breached its fiduciary duties to Dana's shareowners when it rejected the proposals without meeting with ArvinMeritor.
Today's $15 per share tender offer represents a premium of 56% over Dana's closing stock price on June 3, the last trading day before ArvinMeritor submitted its first proposal to Dana in writing and is 39% over Dana's average closing stock price for the last 30 trading days.
In a prepared statement, Dana said its board will evaluate the tender offer and advise shareholders of its position within 10 days. The company urged shareholders to defer making a decision regarding ArvinMeritor's offer until Dana issued that decision. It also "strongly advised" its customers, suppliers and employees to "carefully read" the board's recommendation when available because "it will contain important information."
"We believe that to succeed in today's increasingly global and competitive automotive supplier industry, we must take actions that will increase the opportunities available to our company in the future and enhance value for our shareowners, customers and employees," said Yost.
The combined ArvinMeritor-Dana, "will have a more diversified product mix and a balanced customer base," he added. "Importantly, the combined company will have the increased capability to accelerate growth; make strategic investments; and enlarge our diversified portfolio of products and services. It also will enable us to expand our content per vehicle by developing a complete undercarriage and drivetrain system technology capability to serve both the light and commercial vehicle industries, as we strengthen the powertrain product portfolio. The transaction will also create significant financial benefits, including considerable sales, operating and cost synergies beyond what either company could achieve on its own," he said.
The proposed transaction has a total equity value of approximately $2.2 billion assuming 148.6 million shares of Dana outstanding. In addition, Dana has net debt and minority interests of approximately $2.2 billion, accounting for Dana Credit Corp. on an equity basis, bringing the total enterprise value to approximately $4.4 billion. The transaction is anticipated to be significantly accretive to ArvinMeritor's earnings per share in the first year after the transaction closes.
ArvinMeritor noted that the offer will be conditioned upon, among other things, the removal of Dana's poison pill, acceptance by more than two-thirds of Dana's shares, receipt of necessary regulatory approvals, obtaining necessary financing and other customary conditions.
ArvinMeritor currently owns 1,085,300 shares of Dana's common stock.