GKN owner Dowlais faces merger from US competitor
GKN Automotive owner Dowlais Group has become the latest London-listed firm to receive a merger offer from a US competitor.
In a stock exchange announcement, Dowlais said that Michigan-based American Axle & Manufacturing Holdings had offered £1.16bn for the firm.
The merger offer represents a 25 per cent premium on Dowlais’ closing price last night and a 45 per cent premium on Dowlais’ average share price over the last three months.
This would be the most significant US takeover of a UK business this year, and the firms said the deal would deliver cost synergies of around $300m (£241m) across the groups.
Dowlais and AAM are automotive suppliers specialising in driveline and metal forming technologies.
Dowlais was created in 2023 after being spun off from aerospace firm Melrose Industries. It was formerly known as GKN Automotive. GKN was acquired by Melrose in 2018 after a hostile takeover battle.
According to reports, Melrose previously considered combining GKN Automotive with AAM in 2022.
“The Dowlais board is unanimous in its view that the proposed combination with AAM offers a compelling opportunity to unlock value for our shareholders,” said Dowlais chair Simon Mackenzie Smith.
“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.”
Dowlais said that shareholders in AAM would hold 51 per cent of Dowlais, while its shareholders would own 49 per cent.
AAM’s stock price is down 28 per cent in the last year.
“This announcement marks another key milestone in our continued long-term strategic growth plan,” added CEO of AAM, David Dauch.
“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.”