The Board of Directors of Dana Corporation has rejected an unsolicited tender offer from ArvinMeritor after consultation with its legal and financial advisors. On July 9, 2003, ArvinMeritor launched a tender offer for all outstanding shares of Dana common stock at a price of $15.00 per share.
Dana has filed a Schedule 14D-9 with the Securities and Exchange Commission recommending its shareholders not to tender their stock in response to the offer.
The Dana board said that that ArvinMeritor’s offer was a financially inadequate, high-risk proposal that was not in the best interests of Dana or its shareholders.
In addition, the Board cited the significant financing risks and serious antitrust concerns raised by the offer that could prevent its completion. Dana and ArvinMeritor are the only substantial North American producers of axles, driveshafts, and foundation brakes for medium- and heavy-duty trucks, with combined market shares ranging from 80% to 100%.
ArvinMeritor has not yet even begun the process of seeking antitrust clearance by making the required filing under the Hart-Scott-Rodino Act.
Although ArvinMeritor would need to arrange substantial borrowings to consummate its offer, when confronted by securities regulators from the State of Ohio, ArvinMeritor stated that it has not entered into any commitments or agreements to obtain any such financing. Based on ArvinMeritor’s public disclosures, the size of the required financing would result in ArvinMeritor having an approximately 88% pro forma debt-to-capital ratio, which would be among the highest in the automotive supply industry.