Rejection of ArvinMeritor final, says Dana chairman

TRAVERSE CITY, Mich. -- Dana Corp. chairman Joe Magliochetti said Wednesday his auto parts company feels its recent rejection of rival ArvinMeritor Inc.'s hostile $2.2 billion takeover bid ends the matter and that most Dana shareholders support that decision.

But ArvinMeritor says it is still committed to the deal involving Dana, which has a plant in Cape Girardeau that employs 315 people.

ArvinMeritor, a Troy-based supplier of shocks, struts, suspensions and exhaust systems, last month launched a tender offer of $15 a share in cash for all outstanding shares of Toledo, Ohio-based Dana, its larger competitor.

Dana's board rejected the proposal, saying it was financially inadequate and a high-risk proposition.

"We've responded to the offer that's been made and, from our vantage point, it's concluded," Magliochetti told reporters after a speech to auto executives attending management seminars in this northern Michigan city.

Shareholders agree

He said Dana officials have met with a majority of their shareholders and "they too agree that there's greater long-term value" in following the company's current course of consolidation on its own.

But ArvinMeritor spokeswoman Lin Cummins said Wednesday that her company remained committed to the Dana deal.

"We believe this industry needs to consolidate," she said.

ArvinMeritor sued Dana in U.S. District Court in Virginia two weeks ago, saying Dana made "material misrepresentations" in a filing explaining its rationale for rejecting the takeover bid.

Dana shares have been trading above the offered price, leading to speculation that ArvinMeritor may need to raise its offer. The tender offer is open until midnight Aug. 28.

"We said we'd be flexible with our offer if Dana's management would sit down and we saw more value," Cummins said.

Magliochetti said Dana continues with a restructuring plan announced two years ago, when the company said it would eliminate 11,000 jobs, or 15 percent of its work force, through plant closings and consolidations.

In a filing with the Securities and Exchange Commission on Tuesday, Dana said it has closed 31 plants to date and will close eight more by year's end. The company said it also has been able to reduce its work force by 20 percent, rather than 15 percent.

It also has divested itself of more than $700 million in noncore assets, the SEC filing said. Dana sales totaled about $10 billion in 2002 and it employs more than 60,000 people worldwide. ArvinMeritor had $7 billion in revenue in 2002 and has 32,000 employees at 150 plants in 27 countries.