GKN confirms talks with Dana over sale of auto business

Engineer GKN, which is currently fending off a £7.4bn hostile bid from turnaround specialist Melrose Industries, confirmed on Friday that it has engaged in talks with US-based Dana about a potential sale of its automotive division, Driveline, as part of a deal which would be effected mainly in equity.

GKN said possible transaction being discussed "could provide greater value to shareholders and should therefore be explored alongside the demerger", as compared with the Melrose offer which has been rejected by the board as fundamentally undervaluing the company and its prospects.

GKN announced in January that it was planning to split its aerospace and automotive businesses and in February, it said the demerger was expected to complete by mid-2019.

The company said there can be no certainty the discussions will lead to a deal or as to the terms on which a transaction, if any, might be agreed.

In a separate statement, GKN said it has agreed with its pensions trustees to make a £160m contribution to its UK pension schemes upon the demerger of the two divisions.