The board of GKN, a maker of parts for use by vehicle and plane makers, has been battling to show shareholders that it can create more value for them with its own plan for the company since January when Melrose first approached it.
Melrose confirmed this morning it has increased its offer for FTSE 100 giant GKN to £8.1bn. It has offered to give back £2.5bn to shareholders and agreed to merge its vehicle unit with United States company Dana.
Melrose said all recent attempts to engage in "constructive discussions" with GKN had been blocked.
GKN said in a short statement that its board was now evaluating the revised offer, and that shareholders were advised "not to sign any document which Melrose or its advisers send to them".More news: Roger Federer reveals secret Rafael Nadal conversation after Indian Wells win
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GKN announced the terms of the Driveline deal last week which would see Dana shareholders own 52.75% of the company and GKN the remainder, with the combined company set to be domiciled in the United Kingdom but traded on the New York Stock Exchange.
But on Monday Melrose said that it thought that tie-up was "hasty and ill-thought-through".
The deadline for GKN shareholders to accept its offer is March 29, it said, adding that it encouraged shareholders to accept its offer and help create a "UK-listed manufacturing powerhouse with very significant future potential".
The offer values GKN shares at 463.5p, after Melrose shares slipped to 222.7p in early trading.
GKN has been fighting off Melrose's advances since mid-January, when it rejected a £7.4bn bid.