American Axle & Manufacturing (AAM) in Detroit has acquired the British Dowlais Group, which includes GKN Automotive and GKN Powder Metallurgy, for approximately $1.44 billion in cash and AAM shares.
GKN Automotive, which operates in 20 countries and is a major player in drive systems, is headquartered in Auburn Hills, as is GKN Powder Metallurgy.
“This announcement marks another key milestone in our continued long-term strategic growth plan,” says David C. Dauch, chairman and CEO of AAM. “We are excited to bring together these two outstanding companies to create a leading driveline and metal-forming supplier serving the global automotive industry as it continues to evolve.
“The combination will create significant immediate and long-term shareholder value while helping to power a more sustainable future. Together with Dowlais, we will have the powertrain-agnostic product portfolio, global reach, commitment to innovation, and financial strength to meet the needs of customers and succeed in a dynamic market environment.”
With a combined portfolio of products essential in the manufacturing of internal combustion engine (ICE), hybrid, and electric vehicles, coupled with an enhanced cost structure, the combined company is expected to be well-positioned to serve a diverse customer base spanning multiple geographies and support changing propulsion trends as the industry continues to evolve.
According to the companies, the rationale for the acquisition include:
- It creates a leading global driveline and metal-forming supplier with significant size and scale.
- Results in a comprehensive powertrain-agnostic product portfolio with leading technology.
- A combined diversified customer base with expanded and balanced geographic presence.
- “Compelling” industrial logic with approximately $300 million synergies.
- High margins with strong earnings accretion, cash flow, and balance sheet.
Following the close of the transaction, the combined company will be headquartered in Detroit and will be led by Dauch. Also, independent Dowlais directors Simon Mackenzie Smith and Fiona MacAulay are expected to join the board of the combined group.In addition, four Dowlais executives will be invited to join the AAM executive leadership team.
Under the terms of the agreement, Dowlais shareholders will be entitled to receive for each share of Dowlais’ common stock: 0.0863 shares of new AAM common stock, 42 pence per share in cash and up to a 2.8 pence of Dowlais FY24 final dividend prior to closing. Upon closing of the transaction, it is expected that AAM shareholders will own approximately 51 percent of the combined group and Dowlais shareholders will own approximately 49 percent.
“The Dowlais Board is unanimous in its view that the proposed combination with AAM offers a compelling opportunity to unlock value for our shareholders,” says Mackenzie Smith, chair of Dowlais. “The strategic rationale for the combination is clear: together, we create a global leader with enhanced financial strength, broader diversification, and a market-leading product portfolio that spans traditional and electrified powertrain solutions.
“Importantly, our shareholders will benefit not only from an immediate premium, but also from the significant synergies that this combination will deliver. Whilst the Dowlais Board remain confident in our stand-alone strategy, this transaction creates significant shareholder value while ensuring that our outstanding businesses continue to shape the future of mobility.”
For more information about the acquisition, visit here.
 in Detroit has acquired the British Dowlais Group, which includes GKN Automotive and GKN Powder Metallurgy, for approximately $1.44 billion in cash and AAM shares.){kind=link}