UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 9, 2018
Dana Incorporated
(Exact name of registrant as specified in its charter)
| Delaware | 1-1063 | 26-1531856 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
3939 Technology Drive, Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
(419) 887-3000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☒ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 7.01 | Regulation FD. |
In connection with the announcement of the Business Combination (as defined below) and the related debt financing, Dana Incorporated (“Dana”) intends to present and/or distribute to certain investors a slide presentation dated March 9, 2018, which is attached hereto as Exhibit 99.1 and incorporated by reference herein (the “Investor Presentation”). Dana undertakes no obligation to update, supplement or amend the materials attached hereto as Exhibit 99.1. The Investor Presentation may also be used by executive management of Dana in future meetings with investors and analysts. The Investor Presentation will also be available on Dana’s website at www.dana.com.
The information in this section is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 8.01 | Other Events. |
On March 9, 2018, Dana issued a news release announcing entry into definitive agreements providing for the proposed combination of GKN plc’s (“GKN”) Driveline and Off-Highway Powertrain businesses and Dana to create Dana plc (the “Business Combination”). A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
Important Information for Investors and Stockholders
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction between Dana and GKN, an entity to be formed for the proposed transaction (“SpinCo”) will file with the Securities Exchange Commission (“SEC”) a registration statement containing a joint proxy statement/prospectus, which will constitute a preliminary prospectus of SpinCo and a preliminary proxy statement of Dana, and Dana will file with the SEC a proxy statement on Schedule 14A. The materials to be filed by Dana and SpinCo will be made available to Dana’s investors and stockholders at no expense to them and, once available, copies may be obtained free of charge on Dana’s website at www.dana.com. In addition, all of those materials will be available at no charge on the SEC’s website at www.sec.gov. Investors and stockholders of Dana are urged to read the registration statement, the proxy statement and other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction because they contain important information about the proposed transaction and the parties to the proposed transaction.
Dana and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies of Dana stockholders in connection with the proposed transaction. Investors and stockholders may obtain more detailed information regarding the names, affiliations and interests of certain of Dana’s executive officers and directors in the solicitation by reading Dana’s preliminary proxy statement for its 2018 annual meeting of stockholders, Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, and proxy statement and other relevant materials which will be filed with the SEC in connection with the proposed transaction when they become available. Information concerning the interests of Dana’s participants in the solicitation, which may, in some cases, be different than those of Dana’s stockholders generally, will be set forth in the proxy statement relating to the proposed transaction when it becomes available.
Cautionary Note Regarding Forward-Looking Statements
Certain statements and projections contained in this communication are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. Forward-looking statements include, among other things, statements about the potential benefits of the proposed transaction; the prospective performance and outlook of the combined company’s business, performance and opportunities, including the ability of the parties to complete the proposed transaction and the expected timing of completion of the proposed transaction; as well as any assumptions underlying any of the foregoing. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Such risks and uncertainties, include, without limitation, risks related to Dana’s ability to complete the proposed transaction on the proposed terms and schedule, including obtaining shareholder and regulatory approvals; unforeseen liabilities; future capital expenditures; risks associated with business combination transactions, such as the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the proposed transaction will not occur; risks related to future opportunities and plans for the combined company, including uncertainty of the expected financial performance and results of the combined company following completion of the proposed transaction; disruption from the proposed transaction, making it more difficult to conduct business as usual or maintain relationships with customers, employers or suppliers; and the possibility that if the combined company does not achieve the perceived benefits of the proposed transaction as rapidly or to the extent anticipated by financial analysts or investors, the market price of the combined company’s shares could decline, as well as other risks related to Dana’s business. Dana’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this communication speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.
3
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits. The following exhibits are being filed and furnished with this report.
| Exhibit No. |
Description | |
| 99.1 | Investor Presentation, dated March 9, 2018. | |
| 99.2 | News release, dated March 9, 2018. | |
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DANA INCORPORATED | ||||||
| Date: March 9, 2018 | By: | /s/ Douglas H. Liedberg | ||||
| Name: | Douglas H. Liedberg | |||||
| Title: | Senior Vice President, General Counsel & Secretary | |||||
Filed by Dana Incorporated
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Dana Incorporated
(Commission File No. 001-01063)
Exhibit 99.1
Combination with GKN Driveline
Creating a Global Leader in
Electrified Drive Systems
March 9, 2018
Safe Harbor Statement
Important Information for Investors and Stockholders
This presentation does
not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction between Dana and GKN, an entity to be formed for this proposed transaction
(“SpinCo”) will file with the Securities and Exchange Commission (“SEC”) a registration statement containing a joint proxy statement/prospectus, which will constitute a preliminary prospectus of SpinCo and a preliminary proxy
statement of Dana, and Dana will file with the SEC a proxy statement on Schedule 14A. The materials to be filed by Dana and SpinCo will be made available to Dana’s investors and stockholders at no expense to them and, once available, copies may
be obtained free of charge on Dana’s website at www.dana.com. In addition, all of those materials will be available at no charge on the SEC’s website at www.sec.gov. Investors and stockholders of Dana are urged to read the registration
statement, the proxy statement and other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction because they contain important information about the proposed transaction
and the parties to the proposed transaction.
Dana and its directors, executive officers and other members of its management and employees may be deemed to be
participants in the solicitation of proxies of Dana stockholders in connection with the proposed transaction. Investors and stockholders may obtain more detailed information regarding the names, affiliations and interests of certain of Dana’s
executive officers and directors in the solicitation by reading Dana’s preliminary proxy statement for its 2018 annual meeting of stockholders, Annual Report on Form 10-K for the fiscal year ended
December 31, 2017, and proxy statement and other relevant materials which will be filed with the SEC in connection with the proposed transaction when they become available. Information concerning the interests of Dana’s participants in the
solicitation, which may, in some cases, be different than those of Dana’s stockholders generally, will be set forth in the proxy statement relating to the proposed transaction when it becomes available.
Forward-Looking Statements
Certain statements and projections contained in this presentation
are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business,
management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,”
“plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,”
“ongoing,” similar expressions, and variations or negatives of these words. Forward-looking statements include, among other things, statements about the potential benefits of the proposed transaction; the prospective performance and
outlook of the combined company’s business, performance and opportunities, including cost synergies and projections; the ability of the parties to complete the proposed transaction and the expected timing of completion of the proposed
transaction; as well as any assumptions underlying any of the foregoing. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ
materially and adversely from those expressed in any forward-looking statement. Such risks and uncertainties, include, without limitation, risks related to Dana’s ability to complete the proposed transaction on the proposed terms and schedule,
including obtaining shareholder and regulatory approvals; unforeseen liabilities; future capital expenditures; risks associated with business combination transactions, such as the risk that the businesses will not be integrated successfully, that
such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the proposed transaction will not occur; risks related to future opportunities and plans for the combined company, including uncertainty
of the expected financial performance and results of the combined company following completion of the proposed transaction; disruption from the proposed transaction, making it more difficult to conduct business as usual or maintain relationships
with customers, employers or suppliers; and the possibility that if the combined company does not achieve the perceived benefits of the proposed transaction as rapidly or to the extent anticipated by financial analysts or investors, the market price
of the combined company’s shares could decline, as well as other risks related to Dana’s business.
Dana’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings discuss important risk
factors that could affect our business, results of operations and financial condition. The forward-looking statements in this communication speak only as of this date. Dana does not undertake any obligation to revise or update publicly any
forward-looking statement for any reason.
Agenda
Introduction Craig
Barber
– Transaction Summary Senior Director,
Investor Relations and
Strategic Planning
Strategic Rationale Jim Kamsickas
and Overview President and
– History
Chief Executive Officer
– Strategy and Execution
– GKN Driveline Highlights
Transaction Overview Jonathan Collins
Executive Vice President
– Combination Rationale
Value Creation and Chief Financial Officer
–
Transaction Summary
Dana
to combine with GKN Driveline for consideration of:
$3.5 billion in Dana plc stock (133 million newly issued shares) $1.6 billion in cash
Transaction Assumption of certain pension liabilities (approximately $1.0 billion, net)
Terms Transaction Value
Implied 8.1x 2017 adjusted EBITDA1 (including assumed pensions)
5.5x 2017 adjusted EBITDA1 (pro forma for expected cost synergies and tax efficiencies) Dana’s current 2017 multiple is 6.7x
Ownership: Dana shareholders 52.75% / GKN shareholders 47.25%
Strong proforma balance sheet
with net debt to adjusted EBITDA1 of 2.0x
Timing / Subject to customary shareholder and regulatory approvals
Approvals
Estimated close in H2 2018
Dana CEO and CFO will lead global organization
Corporate Dana will expand its Board with two
independent designees from GKN Structure Combined company to be domiciled in U.K. as Dana plc Remains listed on NYSE
1Includes GKN’s pro rata share of joint
ventures.
See appendix for comments regarding the presentation of non-GAAP measures
© Dana 2018
History and Overview
© Dana 2018
Dana & GKN: A Journey of Long-term Partnership
Dowlais Ironworks
Global Transaction History
1759
GUEST, 7 Joint Ventures
KEEN & 3 Acquisitions by Dana
NETTLEFOLDS 4 Acquisitions by GKN
1902 1954
1983
1904 1946 1995
1966
1999
2018 2002
Discussions
Begin
2011
2017
plc
Strong cultural fit and long history together
© Dana 2018 6
Snapshot
Founded in 1966
61
Manufacturing Locations
2017 sales: in
$ $7.0 billion1 23 countries
5
22 R&D
Customer Centers
~35,000 1,680
Recognitions
people Patents & in 2017 Applications
1Inclusive of pro rata share of joint ventures.
© Dana 2018 7
7
Complete Driveline Systems Offering
Electro-Magnetic Electronic
Control Device Open Differential Torque Manager Electronic
Differential Lock
Front Sideshaft
Limited Slip Differentials
Power Transfer Unit Disconnect
CountertrackTM Jointed Propshaft
CrosstrackTM Propshaft Joint
CountertrackTM ECO Twinster®
2
Joint & Face Spline
Rear Sideshaft
Electronic eTransmission
Two-piece Propshaft eAxle Torque Vectoring
© Dana
2018 8
Strategy and Execution
© Dana 2018 9
Compelling Strategic Combination
Scaling Completing the Portfolio the Platform
Leading Delivering
Electrification Value
© Dana 2018 10
Strategic Fit
Complementary core processes and capabilities
Increasing content with Dana
existing
Adding world-class customers engineering capabilities Adding key light-Adding all-wheel-drive vehicle customers
capabilities Increasing platforms served
Increased penetration Leveraging GKN high-growth markets Driveline’s position in eDrives Unparalleled China Core
electrification presence technology applicable to all mobility markets Balanced global footprint
© Dana 2018 11
Proven Acquisition Capability
2015 2016 2017 2018
Proven record of accretive acquisitions and successful integrations
© Dana 2018 12
Leadership Driving Transformation
($ in millions)
~12.8%
Sales EBITDA Margin
~ 12.3%
CEO Kamsickas CFO Collins Join Dana
11.6% ~$7,900
~$7,600
11.3% 11.3% $7,209
$6,617 10.8%
$6,060 $5,826
2014 2015 2016 2017 2018E 2019E
© Dana 2018 13
GKN Driveline Highlights
© Dana 2018 14
A Leading Provider of eDrive Systems...
Pioneer in Electric Driveline Systems
With 9 programs in production and >700,000 electric
axle drives produced to date, GKN Driveline’s experience is unmatched
8 programs to launch, including 4 in China
eDrive Offerings Illustrative Automotive Platforms Recent
Battery Electric
Co-axial eAxles
Plug-in Hybrid
Integrated eDrive
systems
Full Hybrid
Excellence of the Year
Multi-speed eAxles
Automotive News PACE Awards
Mild Hybrid
â– 2015 Winner –
Two-Speed eAxle –
Multimode eTransmission BMW
â– 2016 Winner – VL3 Driveshaft System – BMW
Micro Hybrid
â– 2017 Winner – Volvo eAxle
Single-speed eAxles
©
Dana 2018 15
… With Growing Content per Vehicle…
Front-Wheel-Drive (FWD) All-Wheel-Drive (AWD) FWD – AWD Internal Combustion Engine Internal Combustion Engine Battery Electric
Gearbox Motor Inverter Software / Controls
© Dana 2018 16
… Poised for Exponential Growth…
The Right Product for Every Vehicle Architecture
(units in millions)
110 101
88
Optimized AWD drivetrains
ICE
Hybrid transmissions
PHEV BEV eAxles HEV
BEV
Integrated eDrive modules
2015 2020 2025
ICE
PHEV / HEV – Plug In / Hybrid Electric Vehicles BEV – Battery Electric Vehicle
Source: IHS.
Integrated eDrive modules
© Dana 2018 17
…With an Exceptional Presence in China
Electric Vehicle Market in China Joint Venture Overview
(units in millions)
37.0 30 years of experience and growth in China
2017-2025 CAGR: >40%
1st western Tier 1 automotive components supplier in China Shanghai Driveline Systems joint 16.0 venture, established in 1988 with HUAYU
Automotive
8.0 Strong customer relationships
3.0
2020 2025 2030 2050
© Dana 2018 18
Combination Rationale
© Dana 2018 19
Unique Strategic Combination
Scaling the Portfolio
• Combined sales of $14.2 billion
• Leadership positions across all three mobility markets
• World-class management
team with deep industry expertise
Completing the Platform
Enhanced customer
coverage Comprehensive product offering Broad end market access Balanced geographic presence
Leading
Electrification
Leading eDrive systems innovator Double content in shift to EV Significant
market growth Core technology applicable in all three end-markets
Delivering
Value
Unlocking $235 million of expected cost synergies
Immediate earnings accretion Strong balance sheet Poised for premium valuation
© Dana
2018 20
Scaling Up to be a Global Leader
A Global Leader in Drive Systems(1)
($ in billions)
$14.2 Leading provider of $0.8 drive systems across $13.4 all 3 major mobility markets
$7.2
$7.0 Creates the largest
$0.8
$6.2 driveline supplier in the world
+ Powertrain Car Powertrain Driveline Powertrain
Powertrain Technology
Reported Sales Proportional Unconsolidated China JV Sales
Note: GKN Driveline financials figures converted from GBP to USD at 1.287 GBP/USD. 1Based on 2017 sales figures.
© Dana 2018 21
Most Comprehensive eDrive Offering…
GKN Electric Driveline Capabilities Dana Electric Driveline Capabilities
Mining Single-speed
eAxles Multi-speed eAxles Co-axial eAxles Medium-duty EP 8 Transit Bus Axle Transmissions
Multimode eTransmissions
Integrated eDrive Systems
Select Vehicles
Sports Cars CUV/SUV Electric Vans
City Delivery Light Trucks Freight Truck Transit Bus Mining Truck
Mitsubishi Outlander Volvo XC90 Street Scooter Zenith Electric Van DongFeng Alpha Bus Sandvik
DD422iE
Gross Vehicle Weight Continuum Gross Vehicle Weight Continuum
Dana
and GKN’s electric-vehicle capabilities and end markets are highly complementary
© Dana 2018 22
…With Significant CPV Increase
Internal Combustion Engine Electric
Trucks
~2x
Buses
~2x
Construction
~1x
© Dana 2018 23
Diversified Business Mix…
Dana GKN Driveline Dana / GKN Driveline
Off-Highway Off-Highway 15%
21% SUV / Truck Off-Highway SUV / Truck 59% 8% 30% Commercial Vehicle
Balanced End- 10% Market Mix =
Commercial
Vehicle CUV / Car CUV / Car 20% 92% 45%
FCA Ford Ford All other 14% 16% All other 22% 28% 44% VW
Global FCA 11% All other FCA
8% 45% 11%
Coverage of
All Major Renault /
Daimler Renault / =
Nissan Renault /
Customers 4% Nissan
5% Nissan 11% VW Paccar BMW 8%
2% 5% 4% Ford GM
Toyota GM Tata
Volvo Deere Tata ToyotaGM 10% 6%
3% 5% 4% Tata Toyota VW
2% 3% 3% 6% 8%
3% 4% 6%
Note: Based on 2017 sales figures, inclusive of GKN’s pro rata share of joint
ventures. GBP converted to USD at a rate of 1.287.
© Dana 2018 24
With a More Complete Product Offering
Light Vehicle Commercial Vehicle Off-Highway
FWD AWD
RWD 4WD Commercial Mass transit Agriculture Construction
Competitor A Competitor B Competitor C
© Dana 2018 25
Balanced Geographic Presence …
Dana GKN Driveline Dana / GKN Driveline
Americas EMEA Americas EMEA
35% EMEA 34% 51% 30% Americas 39% 43%
RoW 23% RoW
RoW 27%
19% Total pro forma combined sales in China of $2.6B1
Combination brings together two of the largest driveline joint ventures in China
Legend
Dana
GKN Driveline
Note: Based on 2017 sales figures, inclusive of GKN’s pro rata share of SDS joint venture. GBP converted to USD at a rate of 1.287.
1Inclusive of 100% of DDAC joint venture (Dana) and 100% of SDS joint venture (GKN).
…With Industry Leading Joint Ventures in China
Top Chinese Light Vehicle OEMs Top Chinese Commercial Vehicle OEMs
OEM Supplier Joint Venture
OEM Supplier Joint Venture
#1 #2 #3 #4 #5
Dana and GKN have joint ventures
with the largest Chinese OEMs
Source: IHS.
© Dana 2018 27
Significant Synergies
~$235 Million
Procurement $120 Purchasing scale
benefits Align commercial terms
Synergies equal to ~1.7% of
Strategic supply partnerships
combined sales
Operating Efficiencies Synergies to be implemented
Integrate global footprint within first
three years
$70 Lean manufacturing
Three-year
implementation cost SG&A expected to be between $250-$300 million
Leverage corporate structure $45
Utilize common resources
Significant and achievable near-term cost synergy plan
Note: Please see Synergy Information rider at the end of presentation for further synergies details.
© Dana 2018 28
Value Creation
©
Dana 2018 29
Significant Shareholder Value Creation
Illustrative Pro Forma Equity Value
$ in billions
25% Increase
$9.1 $0.6 $7.3 $1.2
Global Leader
$3.5
GKN Driveline eDrive Offer
Opportunity Scale and
$3.8 Diversity
Current Dana(1)
Combined Equity Value Synergies, net Tax
Benefits Illustrative PF Equity Value
Substantial incremental value potential from expected synergies and tax benefits
Source: Dana and GKN Management. 1Equity value as of 3/8/18 close.
© Dana 2018 30
Attractive Financial Profile
2017 Sales 2017 Adjusted EBITDA / Margin1
$ in billions
$14.2
$0.8 $1.8
$13.4
$0.2
$0.2
$1.4
$7.2 $7.0
$0.8 $0.8
$0.8
$6.2
$0.2
+ = + $0.6 =
11.6%
10.8%
Proportional Unconsolidated JV Sales Run-Rate Synergies
Source: Dana financials based on reported financials. GKN Driveline financials on reported financials, including restatement of
Off-Highway business per 1H 2017 financials GKN JV D&A based on trading profit %. Note: $ in billions. GBP converted to USD at 1.287.
1Adjusted for estimated R&D capitalized by GKN Driveline of $32m 2EBITDA margins include pro forma synergies.
© Dana 2018 31
Strong Balance Sheet
Pro
Forma Capitalization
Dana Transaction Pro Forma Committed debt financing in place
($ in millions) 12/31/2017 Adjustments 12/31/2017
No maturities until 2023
Cash and Marketable Securities 643 – 643 Undrawn Revolver 578 625 1,203
Liquidity $1,221
$625 $1,846 Robust liquidity approaching $2 billion Term Loan A 275 250 525 Cash flow generation enables rapid
Senior Notes 1,500 1,775 3,275
Other Debt 46 – 46 deleveraging on path to investment
Total Debt $1,821 $2,025 $3,846
grade credit metrics
Net Debt $1,178 $2,025 $3,203 Pensions assumed from GKN largely
Adjusted EBITDA (pre-synergies) $835 $7571 $1,592 “Pay-as-you-go”; UK plan fully-funded
Net Leverage 1.4x 0.6x 2.0x at close
1Includes GKN’s pro rata share of joint ventures
© Dana 2018 32
A Winning Proposition for All Stakeholders
Stakeholders Customers Employees
plc
Substantial synergies and significant OEMs prefer working with suppliers Dana’s exceptional people culture value creation
potential they trust and have developed focused on employee engagement partnerships with over many years Transformational leadership team Strong, complementary cultures with an Full alignment on long-term engineering DNA
Dana has increased shareholder investment to develop differentiated value by more than 130% over the Energized and talented global workforce
products past two years Broader opportunities for all employees Benefits from pooling of two suppliers Best-in-class global governance with
complementary strengths and Diversity driving an inclusive work technologies environment
© Dana 2018 33
Unique Strategic Combination
Scaling Completing the Portfolio the Platform
Leading Delivering
Electrification Value
© Dana 2018 34
Accelerating Growing Through Executing Enterprise Increasing Electrified Transformation Strategy Shareholder Value Mobility
Non-GAAP Financial Information
The preceding slides refer to Adjusted EBITDA, a non-GAAP financial measure which we have defined as net income before interest, taxes,
depreciation, amortization, equity grant expense, restructuring expense and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of
our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in
making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other
Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for income before income taxes, net income or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures
reported by other companies.
Diluted adjusted EPS is a non-GAAP financial measure which we have defined as adjusted net
income divided by adjusted diluted shares. We define adjusted net income as net income attributable to the parent company, excluding any nonrecurring income tax items, restructuring charges, amortization expense and other adjustments not related to
our core operations (as used in adjusted EBITDA), net of any associated income tax effects. We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income. This measure is considered useful for
purposes of providing investors, analysts and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies. Diluted adjusted EPS is neither intended to represent
nor be an alternative measure to diluted EPS reported under GAAP.
Free cash flow is a non-GAAP financial measure which we
have defined as net cash provided by (used in) operating activities less purchases of property, plant and equipment. We believe this measure is useful to investors in evaluating the operational cash flow of the company inclusive of the spending
required to maintain the operations. Free cash flow is neither intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported under GAAP. Free cash flow may not be comparable to similarly
titled measures reported by other companies.
Please reference the “Non-GAAP financial information” accompanying
our quarterly earnings conference call presentations on our website at www.dana.com/investors for reconciliations of adjusted EBITDA, diluted adjusted EPS and free cash flow to the most directly comparable financial measures calculated and presented
in accordance with GAAP. We have not provided a reconciliation of our adjusted EBITDA and diluted adjusted EPS outlook to the most comparable GAAP measures of net income and diluted EPS. Providing net income and diluted EPS guidance is potentially
misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income and diluted EPS, including restructuring actions,
asset impairments and income tax valuation adjustments. The reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented on our website are indicative
of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.
© Dana
2018 36
Synergy Information
The
information regarding synergies and similar information elsewhere in this presentation relate to the synergies being targeted by Dana following the consummation of the transactions. The estimates and forward-looking statements are necessarily
speculative in nature and it can be expected that some or all of the assumptions relating to such information may not materialize or will vary significantly from actual results. As a result, there is no assurance that the synergies will be realized.
We undertake no obligation to update publicly any information relating to synergies or other forward-looking statement for any reason after the date of this document to conform these statements to actual results or to changes to our expectations.
© Dana 2018 37
Exhibit 99.2
Filed by Dana Incorporated
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Dana Incorporated
(Commission File No. 001-01063)
Dana Announces Agreement to Combine with GKN’s Driveline Division
| • | Creates a global leader in vehicle drive systems and electric propulsion |
| • | Significantly increases scale – combined sales of $13.4 billion |
| • | Anticipated run-rate cost synergies of $235 million |
| • | Accretive to Dana’s adjusted earnings per share in 2019 |
MAUMEE, Ohio, Mar. 9, 2018 – Dana Incorporated (NYSE: DAN) announced today that it has signed definitive agreements to combine with the Driveline division of GKN plc (LON: GKN) to create Dana plc, a global leader in driveline systems. The total consideration is composed of $1.6 billion in cash proceeds to GKN plc, the assumption of approximately $1.0 billion of net pension liabilities, and 133 million new Dana plc shares issued to GKN’s shareholders, valued at approximately $3.5 billion (based on Dana’s share price as of March 8, 2018).
Under terms of the agreements, Dana shareholders will own approximately 52.75 percent of the company with GKN shareholders owning 47.25 percent. The combined company will be domiciled in the United Kingdom as Dana plc and will continue to trade on the New York Stock Exchange under the ticker symbol DAN.
“This transformative and strategic transaction solidifies Dana as a world leader in vehicle drive systems and establishes a leading position in electric propulsion, which we see as the future of vehicle drivetrains,” said James Kamsickas, president and CEO of Dana. “We have a long history of partnering with GKN, and the companies possess similar cultures and exceptionally talented people. Our highly complementary businesses share a deep understanding of our customers’ long-term requirements. We look forward to welcoming GKN Driveline into the Dana family and to delivering value and growth to our shareholders.”
Compelling Strategic Rationale for the Combination
| • | Scaling the Portfolio: With pro forma sales of approximately $13.4 billion in 2017, the company will be the global leader in vehicle drive systems across all three major mobility markets – light vehicle, commercial vehicle, and off-highway. |
| • | Leading Electrification: Core eDrive technology portfolio uniquely positions the company to capitalize on electrification opportunities in a rapidly changing market with significant growth potential. |
| • | Completing the Platform: The combined entity will provide global coverage to all major customers with an enhanced product portfolio, balanced end markets, and a diverse geographic presence – strengthening the company’s presence in key markets such as China. |
| • | Delivering Value: The combined company will have a strong balance sheet, and the transaction is expected to result in $235 million of annual cost synergies within three years and be accretive to earnings in the first full year. |
Keith Wandell, non-executive chairman of the Dana Board of Directors, said, “This combination of global leaders results in a unique platform benefiting from the key trends of electrification and global emerging market growth, underpinned by substantial synergies. We look forward to welcoming our new board members and shareholders to create true value for all of our stakeholders.”
Headquartered in the United Kingdom, GKN Driveline has built market leadership positions in three light-vehicle product segments – constant-velocity jointed driveshafts, all-wheel-drive systems, and electrified driveline solutions. The business has expertise across mechanical systems, electronic and software control, and particularly vehicle integration. The transaction also includes GKN’s Off-Highway Powertrain Services business, an expert in off-highway power delivery and service.
With approximately 35,000 employees, GKN Driveline has operations in 23 countries and has 61 manufacturing locations, including one of the largest driveline businesses in China via its joint venture, Shanghai GKN Huayu Driveline Systems (known as SDS). In 2017, the business generated consolidated sales of approximately $6.2 billion.
Financial Highlights
Dana has put in place committed debt financing to fund the cash consideration and will issue 133 million shares of Dana plc stock to GKN shareholders to consummate the transaction. This mix of consideration preserves the company’s strong balance sheet, with an expected net debt / adjusted EBITDA ratio (including GKN’s share of its China joint venture but excluding any synergies) of approximately 2.0x.
Dana expects to deliver annual run-rate cost synergies of $235 million within three years. The combination will also yield tax benefits, creating further value for shareholders. The transaction is expected to be accretive to Dana’s diluted adjusted EPS in 2019.
“We believe this transaction will result in a much stronger Dana, both strategically and financially, by taking advantage of the combined company’s global scale, technology leadership, strong balance sheet, and attractive cash flow profile,” said Jonathan Collins, executive vice president and chief financial officer of Dana. “In the near-term, we expect our business to achieve best-in-class returns on capital and continue on the path to an investment grade credit profile.”
Dana expects to complete the transaction, which is subject to shareholder and customary regulatory approvals, in the second half of 2018.
Credit Suisse and Barclays acted as M&A advisers to Dana. Credit Suisse served as lead adviser and provided a fairness opinion to Dana’s Board of Directors. Credit Suisse, Barclays, and Citi provided committed financing to Dana for the transaction. Maven Global acted as capital markets adviser to Dana. Paul, Weiss, Rifkind, Wharton & Garrison LLP and Macfarlanes LLP acted as legal advisers to Dana.
In addition, the Dana Board of Directors was advised by Skadden, Arps, Slate, Meagher & Flom as legal advisers and PJT Partners as financial advisers.
Governance and Leadership
Effective as of the closing of the transaction, Mr. Wandell will serve as non-executive chairman and Mr. Kamsickas will be president, chief executive officer, and a director of the new company. In addition to the Dana representatives, the board of directors of combined company will include two representatives to be designated by GKN.
Dana to Host Conference Call at 8:30 a.m. Today
Dana will host a webcast and conference call at 8:30 a.m. EST today. Participants may listen to the audio portion of the conference call either through audio streaming online or by telephone. Slide viewing is available online via a link provided on the Dana investor website: www.dana.com/investors. U.S. and Canadian locations should dial 1-888-311-4590 and international locations should call 1-706-758-0054. Please enter conference I.D. 7897632 and ask for the “Dana Webcast and Conference Call.” Phone registration will be available starting at 8 a.m. EST.
An audio recording of the webcast will be available after 5:30 p.m. EST on March 9 by dialing 1-855-859-2056 (U.S. or Canada) or 1-404-537-3406 (international) and entering conference I.D. 7897632. A webcast replay will also be available after 5:30 p.m. EST and may be accessed via Dana’s investor website.
Non-GAAP Financial Information
This release refers to adjusted EBITDA, a non-GAAP financial measure which we have defined as net income before interest, taxes, depreciation, amortization, equity grant expense, restructuring expense and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts,
investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for income before income taxes, net income or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Diluted adjusted EPS is a non-GAAP financial measure, which we have defined as adjusted net income divided by adjusted diluted shares. We define adjusted net income as net income (loss) attributable to the parent company, excluding any nonrecurring income tax items, restructuring and impairment expense, amortization expense, and other adjustments not related to our core operations (as used in adjusted EBITDA), net of any associated income tax effects. We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income. This measure is considered useful for purposes of providing investors, analysts, and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies. Diluted adjusted EPS is neither intended to represent nor be an alternative measure to diluted EPS reported under GAAP.
Please reference the “Non-GAAP Financial Information” accompanying our quarterly earnings conference call presentations on our website at www.dana.com/investors for reconciliations of adjusted EBITDA and diluted adjusted EPS to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have not provided a reconciliation of our adjusted EBITDA and diluted adjusted EPS outlook to the most comparable GAAP measures of net income and diluted EPS. Providing net income and diluted EPS guidance is potentially misleading and not practical given the difficulty of projecting event-driven transactional and other non-core operating items that are included in net income and diluted EPS, including restructuring actions, asset impairments and income tax valuation adjustments. The reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented on our website are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.
Important Information for Investors and Stockholders
This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction between Dana and GKN, an entity to be created for this transaction (“SpinCo”) will file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 containing a joint proxy statement/prospectus, which will constitute a preliminary prospectus of SpinCo and a preliminary proxy statement of Dana, and Dana will file with the SEC a proxy statement on Schedule 14A. The materials to be filed by Dana and SpinCo will be made available to Dana’s investors and stockholders at no expense to them and, once available, copies may be obtained free of charge on Dana’s website at www.dana.com. In addition, all of those materials will be available at no charge on the SEC’s website at www.sec.gov. Investors and stockholders of Dana are urged to read the registration statement on Form S-4, the proxy
statement and other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction because they contain important information about the proposed transaction and the parties to the proposed transaction.
Dana and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies of Dana stockholders in connection with the proposed transaction. Investors and stockholders may obtain more detailed information regarding the names, affiliations and interests of certain of Dana’s executive officers and directors in the solicitation by reading Dana’s preliminary proxy statement for its 2018 annual meeting of stockholders, Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and proxy statement and other relevant materials which will be filed with the SEC in connection with the proposed transaction when they become available. Information concerning the interests of Dana’s participants in the solicitation, which may, in some cases, be different than those of Dana’s stockholders generally, will be set forth in the proxy statement relating to the proposed transaction when it becomes available.
Forward-Looking Statements
Certain statements and projections contained in this release are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. Forward-looking statements include, among other things, statements about the potential benefits of the proposed transaction; the prospective performance and outlook of the combined company’s business, performance and opportunities, including cost synergies and projections; the ability of the parties to complete the proposed transaction and the expected timing of completion of the proposed transaction; as well as any assumptions underlying any of the foregoing. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Such risks and uncertainties, include, without limitation, risks related to Dana’s ability to complete the transaction on the proposed terms and schedule, including obtaining shareholder and regulatory approvals; unforeseen liabilities; future capital expenditures; risks associated with business combination transactions, such as the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur; risks related to future opportunities and plans for the combined company, including uncertainty of the expected financial performance and results of the combined company following completion of the proposed
transaction; disruption from the proposed transaction, making it more difficult to conduct business as usual or maintain relationships with customers, employers or suppliers; and the possibility that if the combined company does not achieve the perceived benefits of the proposed transaction as rapidly or to the extent anticipated by financial analysts or investors, the market price of the combined company’s shares could decline, as well as other risks related to Dana’s business.
Dana’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this release speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.
About Dana Incorporated
Dana is a world leader in highly engineered solutions for improving the efficiency, performance, and sustainability of powered vehicles and machinery. Dana supports the passenger vehicle, commercial truck, and off-highway markets, as well as industrial and stationary equipment applications. Founded in 1904, Dana employs more than 30,000 people in 33 countries on six continents who are committed to delivering long-term value to customers. Based in Maumee, Ohio, USA, the company reported sales of $7.2 billion in 2017. Dana is ranked among the Drucker Institute’s listing of the 250 most effectively managed companies. For more information, please visit dana.com.
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