U.S.-based auto parts maker Dana Inc. on March 26 improved the terms of its potential combination with U.K. engineering business GKN PLC's driveline division and doubled the size of its share repurchase program.

The move comes as Dana tries to fend off a hostile takeover bid for GKN by British firm Melrose Industries PLC. GKN shareholders have until March 29 to make a decision about the offer made by Melrose.

Dana increased the cash component of its offer by 8.6%, or $140 million, taking the total cash consideration to about $1.77 billion plus $1 billion in pension liabilities and 133 million Dana shares issued to GKN shareholders.

After the completion of the transaction, Dana plc will be registered in the U.K., with the shares listed on both the London Stock Exchange and the New York Stock Exchange.

The drivetrain technology company also doubled the size of its share repurchase program to $200 million to support its liquidity for Dana shares after the merger.

In a statement released the same day, GKN said it welcomes the improved offer and said it intends to return up to $700 million of cash to shareholders "as soon as practicable" following the completion of the deal. The cash amount will be the first installment of the up to £2.5 billion cash return program it previously announced.