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". The deadline for acceptances is 1.00 p.m. on Thursday, 29 March.
The new offer proposed that GKN shareholders own 60 percent of Melrose and receive £1.4 billion in cash.
Melrose also warned that private United Kingdom shareholders should also be aware that they would be liable to income tax on the value of any new Dana shares they receive and the transaction would "involve a lengthy and uncertain completion process, including anti-trust clearances in the EU, US and China, as well as Dana's shareholder approval, which is not expected until the last quarter of 2018".
Melrose announced in a statement this morning that it was increasing its takeover offer for GKN to 467 pence per share, valuing the blue-chip group at £8.1 billion.
"The board of GKN is now evaluating the revised offer". Accept its bid and it could all be over...
GKN shares were down 2.7% on Monday afternoon at 423.50p, and Melrose shares were down 5.5% at 212.50p.
GKN last week agreed to sell its automotive unit to US -based Dana Inc.in a $6.1 billion transaction aimed at repelling Melrose. Its aerospace division has also attracted a number of suitors since January, but the GKN board decided their proposals undervalued the business and did not pursue them, the company added.
Mauricio Pellegrino apologises for leaving Southampton in relegation battle after being sacked
Southampton legend Matt Le Tissier believes Mauricio Pellegrino was sacked because of his negative style of football. Benfica are planning a run at former Watford head coach Silva should Rui Vitoria fail to win the Portuguese title.
"It was a little bit better than we thought", he told Reuters of the new offer.
Publishing its latest defence plan on Monday, GKN said that shareholders would be invested in a more profitable GKN Aerospace, plus have holdings in the merged GKN-Dana company.
The company, which can trace its roots back to 1759, is attractive to buyers because of its involvement with growing aircraft programmes such as the A350 and the A320, and in cars, where it has been growing market share and supplies manufacturers including Fiat Chrysler and VW Group.
But it was left vulnerable to predators after two profit warnings late past year, caused by problems at its USA aerospace business.
He added: "Melrose is not the right owner of GKN".
GKN employs around 6,000 people in Britain - about 10 percent of its workforce.