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UPDATE 1-Takeover target GKN raises forecast for electric driveline sales

(Adds Melrose response)

LONDON, Jan 21 (Reuters) - GKN, the British engineering company trying to fend off a hostile bid from Melrose Industries, increased its sales forecast for its electric driveline unit on Sunday, saying it had won significant contracts from major global automakers.

The company said its electric driveline sales were forecast to rise from 33 million pounds ($46 million) in 2017 to 275 million pounds in 2020, raising its forecast by 75 million pounds.

GKN's automotive unit has been developing driveline systems for electric vehicles since 2002, and its technology is used in vehicles such as the Volvo XC90 T8 Twin engine, the BMW 2 Series Active Tourer and the Mitsubishi Outlander.

It said its electric driveline technology had 2 billion pounds of orders on its books as of Dec 31.

GKN set out plans to separate its automotive business from its aerospace operations on Jan. 12 after it rebuffed an approach from turnaround specialist Melrose.

Undeterred by the rejection, Melrose turned hostile with a firm 7.4-billion-pounds bid on Jan. 17.

Melrose said on Sunday it welcomed the news about GKN's order book.

"R&D is a key part of the Melrose equation and today's announcement is part of the justification of the premium that we are offering to GKN shareholders as we seek to create a 11-billion-pound value powerhouse by merging our two businesses," a spokeswoman said.

($1 = 0.7217 pounds) (Reporting by Paul Sandle; Editing by Susan Fenton and Elaine Hardcastle)