ArvinMeritor, Dana spar over proposed merger

Beginning in late July, ArvinMeritor Inc and Dana Corporation started a series of financial and, then, legal moves related to the unsolicited takeover bid for Dana made by ArvinMeritor. Dana describes the offer of $15 per share for all outstanding shares as a hostile bid. The proposal has a total value of $4.4 billion, including $2.2 billion for 148.6 million shares of Dana stock plus $2.2 billion in debt and minority interests. ArvinMeritor currently owns almost 1.1 million shares of Dana.

Dana's board of directors rejected the bid immediately, saying that it offered inadequate value and a high level of risk to stockholders. Dana also said that antitrust concerns could prevent completion of the merger even if the offer were accepted. In return, ArvinMeritor filed legal action against the Dana board for rejecting the offer before meeting with ArvinMeritor. The suit contends that Dana's board members breached their fiduciary responsibilities to maintain value for shareholders by refusing to discuss the matter. The ArvinMeritor suit is pending before a court in Buena Vista VA. ArvinMeritor also says that the offer would permit stockholders to realize cash value for shares without having to endure the risk of Dana's proposed restructuring plan.

In return, Dana has filed federal suit against ArvinMeritor's financial advisor, the Swiss investment-banking firm, USB AG, contending that the bank used confidential information for the ArvinMeritor offer. Dana says the information was gathered by USB in the process of completing a project for Dana.

In other developments, Dana continues to follow its restructuring plan, which calls for closing eight more facilities in 2003. The company has already closed 31 plants and eliminated 15,000 jobs as part of its restructuring. It also has divested assets worth an estimated $710 million.

TAGS: Components
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