Melrose Industries has tabled a £7.4 billion hostile takeover bid for GKN in a move it claims would "re-energise and re-purpose" the embattled engineer.
Melrose, which specialises in buying and rejuvenating manufacturers, said the cash-and-stock offer values GKN shares at 430.1p each.
GKN shareholders would own around 57% of the combined group and would become "major participants in the potential future value creation in both the GKN and Melrose businesses", it added.
The unsolicited takeover bid for one of Britain's oldest companies comes after Melrose sought to woo GKN shareholders this week in an effort to garner support for a deal.
GKN rejected an initial takeover approach from Melrose worth £7 billion last week.
Melrose has claimed that GKN is an "under-managed organisation without focus" with sub-par shareholder returns, but offers "huge scope for improvement".
In making its firm offer, Melrose said the acquisition would deliver "significantly greater benefits to the shareholders of GKN than GKN could otherwise achieve on its own".
It comes at a difficult time for GKN, which in November ditched its incoming boss less than two months before he was due to take the top job as it warned over another hit in its troubled US plant.