Statement re pension schemes

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

20 March 2018

GKN plc ("GKN")Statement re pension schemes

Summary

The Board of GKN (the "Board") notes the announcement by Melrose Industries PLC ("Melrose") of 19 March 2018 and in particular its comments relating to GKN's UK pension schemes. These comments are misleading as to the true status of GKN's pension obligations post the combination of our Driveline business with Dana Incorporated ("Dana").

GKN notes the following:

· As part of the transaction with Dana, GKN will transfer £1,375 million of gross pension and post-retirement medical scheme liabilities and £818 million of pre-tax deficit

· In relation to the remaining pension liabilities, under its binding agreement with the UK pension trustees (the "Trustees"), GKN has agreed actions to:

o Eliminate the IAS 19 deficit of its UK schemes;

o Remove the need for expected future cash contributions into the UK schemes;

o Reduce the gross UK IAS 19 liabilities of its schemes to under £2 billion; and

o Substantially reduce the volatility of the remaining UK schemes.

· The stand-alone Aerospace business is expected to retain an investment grade credit rating with conservative leverage ratios.

· By comparison, having criticised the well-established and proven liability management exercises agreed between GKN and the Trustees, Melrose has not to date agreed any meaningful short-term actions to reduce the existing scheme liabilities.

Commenting, GKN Group Finance Director, Jos Sclater, said:

"GKN has a clear and comprehensive plan to reduce its pension liabilities and eliminate the deficit in its UK pension schemes. We have a binding agreement with the Trustees which works for all stakeholders: the scheme members, the Trustees and the company and its shareholders.

"A month ago, Melrose appeared to suggest that its plan to pay £150 million into the pension scheme was sufficient. Now it appears to have unveiled a £1 billion plan that would achieve less than GKN's own agreement with the Trustees, at a greater cash cost which would erode shareholder value. I think our shareholders deserve better."

Agreement with Dana

In GKN's announcement of 9 March 2018 regarding the proposed combination of GKN's Driveline business and Dana (the "Proposed Combination"), GKN confirmed that it had agreed to transfer £1,375 million of its IAS 19 pension and post-retirement medical scheme liabilities and £818 million of its pre-tax IAS 19 deficit to Dana as part of the Proposed Combination. This transfer represents approximately 54% of GKN's global IAS 19 deficit. Dana has also agreed to contribute £124 million in order to eliminate the UK IAS 19 deficit relating to that part of the UK schemes transferring to it.

Agreement with Trustees

In addition, on 9 March 2018 GKN announced the terms of an agreement with the Trustees to reduce the UK schemes' liabilities and eliminate their IAS 19 deficit. The key elements of this agreement, which is conditional on the Melrose offer lapsing or being withdrawn, include:

· An enhanced transfer value ("ETV") exercise, a pension increase exchange ("PIE") exercise and a liability buy-out programme, all of which are commonly used tools for pension liability management. The ETV and PIE exercises will be carried out in accordance with the Code of Good Practice for Pension Incentive Exercises which is supported by the Pensions Regulator. GKN will make a £220 million contribution to the scheme to support these liability management exercises and buy-out programme. Together with the pensions transfer to Dana under the Proposed Combination, these actions are expected to reduce GKN's UK IAS 19 liabilities by approximately £1.3 billion to under £2 billion.

· Provision of a GKN guarantee in favour of the Trustees in relation to the retained UK pension liabilities following completion of the Proposed Combination.

· A substantial cash contribution to the UK pension schemes, funded from the proceeds arising from the proposed disposal of GKN's Powder Metallurgy business and other non-core disposals, totalling some £405 million (£336 million net of tax) to achieve the elimination of the remaining UK deficit.

Once implemented, the transfer to Dana and the agreement with the Trustees is expected to enable the stand-alone GKN business ("GKN Aerospace") to operate with pension schemes with no UK IAS 19 deficit as shown in the table below.

1 Note: Figures in table exclude post-retirement medical scheme liabilities

Going forward, to seek to achieve stability in the IAS 19 funding level of the 2012 scheme, GKN and the trustees of the 2012 UK scheme have agreed to work together to implement measures such as a low risk investment strategy and implementation of full hedging of interest rate and inflation risks. This is expected to result in no additional future contributions being required, thereby enhancing the future free cash flow of GKN Aerospace.

GKN has reached a binding agreement with the Trustees in respect of the above actions. In their announcement of 12 March 2018, the Trustees confirmed that they consider that the agreement provides appropriate mitigation to the UK pension schemes and that the agreement is in the best interests of the schemes' members.

Contacts:

GKN plc

Guy Stainer, Investor Relations Director

Tel: +44 (0)20 7463 2382

FTI Consulting

Andrew Lorenz / Richard Mountain

Tel: +44 (0)203 727 1340

Gleacher Shacklock (Financial Adviser to GKN plc)

Tim Shacklock, Dominic Lee, Tom Quinn

Tel: +44 (0)20 7484 1150

J.P. Morgan Cazenove (Financial Adviser and Corporate Broker to GKN plc)

Robert Constant, Dwayne Lysaght, Stephen Smith

Tel: +44 (0)20 7742 4000

UBS (Financial Adviser and Corporate Broker to GKN plc)

Hew Glyn Davies, James Robertson, Jonathan Retter

Tel: +44 (0)20 7567 8000

Sources and bases of information

1.1 The reference to the GKN pre-tax IAS 19 pension deficit transferring to Dana plc of £818m representing approximately 54% of GKN's global IAS 19 deficit is calculated as:

(A) the pre-tax IAS 19 pension deficit transferring to Dana plc of £818m (as set out on page 17 of the announcement made by GKN entitled "Proposed combination of GKN Driveline and Dana" on 9 March 2018); expressed as a percentage (rounded to two significant figures) of

(B) the GKN pre-tax IAS 19 pension deficit of £1,504m (as set out on page 23 of the announcement made by GKN entitled "GKN 2017 Results Announcement" on 27 February 2017).

Further information

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Gleacher Shacklock LLP ("Gleacher Shacklock"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively as financial adviser to GKN and no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than GKN for providing the protections afforded to clients of Gleacher Shacklock or for providing advice in connection with the subject matter of this announcement or any other matter referred to herein.

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom. J.P. Morgan Cazenove is acting exclusively as financial adviser to GKN and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters set out in this announcement and will not be responsible to anyone other than GKN for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in relation to any matter referred to herein.

UBS Limited ("UBS") is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom. UBS is acting exclusively as financial adviser to GKN and no one else for the purpose of the consideration of a proposed acquisition by Melrose and will not be responsible to anyone other than GKN for providing the protections offered to clients of UBS nor for providing advice in relation to the subject matter of this announcement or any transaction, arrangement or other matter referred to herein.

Disclosure requirements of the City Code

Under Rule 8.3(a) of the City Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on a website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be published on the GKN website (www.gkn.com) by no later than 12 noon on the business day following this announcement. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Cautionary Statement - other matters

This announcement contains forward looking statements in relation to matters other than the agreement between GKN and Dana on the Proposed Combination which are made in good faith based on the information available at the time of its approval. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of risks and uncertainties that are inherent in any forward looking statement which could cause actual results to differ materially from those currently anticipated.

Cautionary statement - Proposed Combination

This announcement contains forward looking statements which are made in good faith based on the information available at the time of its publication. The forward-looking statements contained in this announcement may include statements about the expected effects of the Proposed Combination on GKN, Dana, Dana plc and/or GKN Aerospace, the anticipated timing and benefits of the Proposed Combination, GKN's and Dana's anticipated standalone financial results and all other statements in this document other than statements of historical facts. Without limitation, any statements preceded or followed by or that include the words "targets," "plans," "believes," "expects," "intends," "will," "likely," "may," "anticipates," "estimates," "projects," "should," "would," "positioned," "strategy," "future" or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements. It is believed that the expectations reflected in these statements are reasonable but they are based upon a number of assumptions that are subject to change and they may be affected by a number of risks and uncertainties that are inherent in any forward looking statement which could cause actual results to differ materially from those currently anticipated. Such risks, uncertainties and assumptions include: the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the satisfaction of the conditions to the Proposed Combination and other risks related to Completion and actions related thereto; GKN's and Dana's ability to complete the Proposed Combination on the anticipated terms and schedule, including the ability to obtain shareholder or regulatory approvals of the Proposed Combination; the ability of the parties to integrate successfully GKN Driveline with the business of Dana following the consummation of the Proposed Combination and to realize the anticipated synergies (including any anticipated tax synergies) and other benefits expected from the Proposed Combination; the effects of government regulation on GKN's or Dana's businesses; the risk that disruptions from the Proposed Combination will harm GKN's or Dana's business; the effect of the announcement of the Proposed Combination on the ability of GKN and Dana to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; potential litigation in connection with the Proposed Combination; and other factors detailed in GKN's Annual Report and Accounts 2016 and Dana's reports filed with the SEC, including its Annual Report on Form 10-K under the caption "Risk Factors". Nothing in this document should be regarded as a profit forecast. Forward-looking statements included herein are made as of the date hereof, and none of GKN, Dana or Dana plc undertakes, and each expressly disclaims, any obligation to update publicly such statements to reflect subsequent events or circumstances.

No offer or solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Additional information and where to find it

This communication may be deemed to be solicitation material in respect of the Proposed Combination. The Proposed Combination will be submitted to a vote of Dana's stockholders and a vote of GKN's shareholders. In connection with the Proposed Combination, it is intended that Dana plc will file with the SEC a registration statement on Form S-4, containing a prospectus with respect to Dana plc's ordinary shares to be issued in the Proposed Combination (the "Prospectus") and a proxy statement for Dana's stockholders (the "Proxy Statement"), and Dana will mail the Proxy Statement to its stockholders and file other documents regarding the Proposed Combination with the SEC. Further, it is intended that GKN will mail a circular to its shareholders (the "Circular") containing further details in relation to the Proposed Combination and notice of the general meeting. DANA'S SECURITYHOLDERS AND GKN'S SHAREHOLDERS ARE URGED TO CAREFULLY READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROSPECTUS AND THE PROXY STATEMENT, AND THE CIRCULAR WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PARTIES, THE PROPOSED COMBINATION AND DANA PLC. Investors will be able to obtain copies of the Prospectus and the Proxy Statement as well as other filings containing information about Dana, without charge, at the SEC's website, http://www.sec.gov. Copies of documents filed with the SEC by GKN will be made available free of charge on GKN's Investor Relations Website. Copies of documents filed with the SEC by Dana or Dana plc will be made available free of charge on Dana's Investor Relations Website.

Participants in the solicitation

GKN and its directors and executive officers, and Dana and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Dana common stock in respect to the Proposed Combination. Information about the directors and executive officers of GKN is set forth in GKN's Annual Report and Accounts 2016. Information about the directors and executive officers of Dana is set forth in the definitive proxy statement for Dana's 2017 Annual Meeting of Stockholders, which was filed with the SEC on March 16, 2017. Investors may obtain additional information regarding the interests of such participants by reading each of the Prospectus and the Proxy Statement and the Circular regarding the Proposed Combination when it becomes available.