Dana Corp. stock draws rival bid

The possibility of a hostile takeover had the 315 employees at Dana Corp.'s Cape Girardeau plant buzzing with uncertainty Tuesday after news came down that a competitor planned to make an unsolicited takeover bid to the company's shareholders.

"It really flamed up this morning, but now it's dying down some," plant manager Larry Dillon said Tuesday afternoon. "Naturally, they're curious and concerned and want to see what information there is."

The employees at the auto parts manufacturing plant wanted to know if they should sell their company stock, if they could lose their jobs or if their benefits could change, Dillon said.

On Tuesday, Michigan-based auto parts maker ArvinMeritor launched a hostile takeover bid for Dana Corp., offering $15 per share in cash for all privately held Dana shares. That is 25 percent more than Dana's closing price on the New York Stock Exchange Monday.

Last year, Dana reported $9.5 billion in sales. The offer was valued at $2.2 billion, plus another $2.2 billion for assumption of debt.

At the time of the announcement, Dana shares shot up 40 percent, or $4.83, to $16.85, surpassing the offer price. The higher value of the Dana stock suggests ArvinMeritor will have to raise its offer. ArvinMeritor shares were down 50 cents Tuesday at $20.50.

In a news release, ArvinMeritor said it submitted its first takeover proposal to Dana, based in Toledo, Ohio, in early June.

ArvinMeritor chairman and chief executive Larry Yost said the company would prefer to meet with Dana's board of directors and advisers, but added that Dana has rejected prior proposals and refused requests to enter into discussions.

"Therefore, we believe it is necessary to take our offers directly to the shareholders," Yost said.

Both companies are major worldwide suppliers to automobile makers, which are in the midst of a ferocious price war and have shown a desire to work with fewer suppliers. ArvinMeritor expects to save $200 million annually by eliminating administrative duplications and implementing other cost-saving measures, Yost said in the release.

A merger of the two would place the combined company among the Top 10 global automotive suppliers as measured by sales.

Evaluating parts

The Dana plant in Cape Girardeau, one of hundreds worldwide, is a manufacturer of components for center sections of driving axles for vehicles like the Ford Explorer, Grand Cherokee and Ranger pickup. The plant here is consistently in the top 20 of the county's largest employers.

ArvinMeritor, which has a 600-employee plant in Dexter, Mo., is also a worldwide manufacturer of auto parts, mainly for heavier trucks. Unlike the Cape Girardeau Dana plant, ArvinMeritor in Dexter has been unionized and its workers are members of the United Auto Workers union.

Dillon thinks both ArvinMeritor and Dana make auto parts for larger vehicles, though he doesn't believe ArvinMeritor makes the smaller parts similar to those that the Cape Girardeau plant manufactures.

Dillon said he found out about the announcement after looking on Dana's Web site Tuesday. He said he participated in a conference call with corporate officers Tuesday afternoon.

"They just said they would be issuing a response back to ArvinMeritor within 10 days and that they would make that response public," Dillon said.

The news wasn't particularly surprising to Dillon. The auto parts industry is one that has been consolidating for years.

"There will be a lot fewer players in the next 10 years," he said.

Dillon said his initial thought was that ArvinMeritor and Dana, which began operations in Cape Girardeau in 1990, may complement each other.

"But would a merger work? I don't know," he said. "It may be a good marriage. It's just way too soon to know. There are a lot of guys with more brain power than me working to figure that out."

The Associated Press contributed to this report.

smoyers@semissourian.com

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