Engineering giant GKN, which is currently trying to fend off a £7.4bn bid from turnaround investor Melrose Industries, today confirmed it had reached an agreement to merge part of its business with Dana.
The FTSE 100 firm has agreed to merge its auto parts business with the US firm in a deal worth $6.1bn (£4.4bn).
Dana will be a newly-formed UK public limited company and will be listed on the New York Stock Exchange and headquartered in Ohio.
The firms expect the deal to be completed during the fourth quarter of 2018 - dependent on shareholder approval and certain anti-trust go-aheads, along with the Melrose offer "having lapsed or been withdrawn".
Mike Turner, chairman of GKN, said:
This combination of GKN Driveline and Dana will create a US and UK led global market leader in vehicle drive systems. The synergies between these two businesses and our complementary product portfolios make this a great deal for GKN shareholders.
The announcement comes after shareholders in Melrose voted in favour of its GKN bid yesterday at an annual general meeting.
GKN management had been attempting to win over shareholders by announcing a plan to split the two main parts of the business - Driveline and aerospace, but said last week that a combination of the Driveline branch with Dana could provide greater shareholder value than the original plan.
It was therefore exploring that alongside the demerger - compared to the Melrose offer, rejected by the board as "fundamentally undervaluing" the firm and its prospects.
Today, GKN said the Dana move brings together "two highly complementary businesses" and will leave GKN a "focused, world-class aerospace company".
Earlier this week, MPs said the proposed takeover of GKN by Melrose should be blocked, in a letter to the business secretary.
The Pensions Regulator has also warned that the move could affect the firm's ability to fund its pension scheme.