Legal Business

Deal watch: Global 100 elite line-up on $6bn GKN-Dana transatlantic union

A group of elite firms both sides of the Atlantic, including Macfarlanes and Slaughter and May, face off as British engineering giant GKN has agreed to a $6.1bn merger of its automotive business with US-based car parts supplier Dana.

In a deal that will create one of the world’s largest auto parts providers, Macfarlanes’ corporate partners Graham Gibb and Richard Burrows acted for Dana as it announced today (9 March) that its shareholders will get a 53% stake in GKN.

Paul Weiss Rifkind Wharton & Garrison’s corporate partner Tarun Stewart also acted for the Ohio-headquartered company, while Skadden Arps Slate Meagher & Flom advised Dana’s board of directors with a team including M&A partners Stephen Arcano, Ann Beth Stebbins and Scott Hopkins.

Slaughters partners Martin Hattrell and Robert Innes acted for GKN alongside Cravath, Swaine & Moore.

Slaughters previously advised GKN on a £7.4bn takeover bid launched by British investment company Melrose earlier this year. Head of M&A Roland Turnill led the Slaughters team as GKN rejected the offer.

As part of its defence against the Melrose takeover bid, GKN announced earlier this month that it was going to split the two main parts of its business – its aerospace division and its Driveline unit, which supplies parts to about half of the world’s makers of passenger cars.

Melrose’s offer sparked a public debate with some worrying that Melrose would break up GKN to hike its value ahead of re-selling it within a few years. A cross-party group of MPs asked in a letter to business secretary Greg Clark that the bid be blocked, as the Pensions Regulator warned that the move could affect GKN’s ability to fund its pension scheme. Melrose now has about ten days to decide whether to raise its offer for GKN.

But GKN chairman Mark Turner said in a statement the combination of GKN Driveline with Dana ‘will create a US and UK-led global market leader in vehicle drive systems. The synergies between these two businesses and our complementary product portfolios make this a great deal for GKN shareholders.’

With customers including Fiat Chrysler and Volkswagen, GKN’s auto parts business generated £5.3bn in sales last year. According to the terms of the deal, GKN’s shareholders will now own around 47% of the new business, which will operate as Dana Plc, have its domicile in the UK and continue to trade on the New York Stock Exchange.