American Axle to acquire UK-based Dowlais in $1.44bn deal

American Axle & Manufacturing struck a $1.44bn cash-and-shares deal to acquire Dowlais Group, further shrinking the number of companies listed on the London Stock Exchange.

The acquisition offers a 25% premium on Dowlais’ latest closing price and a 45% premium on its three-month average.

Following the transaction, American Axle will own 51% of the combined entity, while Dowlais’ shareholders will retain a 49% stake. The merger is set to generate annual revenues of around $12bn, with projected cost savings of $300m within three years. The deal will also strengthen cash flow, improve the balance sheet, and expand the company’s global presence as the auto industry continues transitioning toward electric and hybrid powertrains.

Both companies supply components for traditional, hybrid, and electric vehicles at a time when automakers face mounting competition from Chinese manufacturers and the rising costs of electrification.

The deal is part of a growing trend of UK-listed firms being acquired by private equity and foreign investors. In 2023, one in 20 publicly listed UK companies was put under offer, according to Peel Hunt.

Dowlais, which has roots dating back to 1759, was spun off from Melrose Industries in 2023. Since its listing, the company’s stock has dropped 38.5%, making it an attractive takeover target. This acquisition positions American Axle for stronger market leadership while marking another UK company’s exit from the London Stock Exchange.

Source: Forbes

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