A £1.2 billion takeover agreement has been reached between British car parts manufacturer Dowlais and its American counterpart American Axle & Manufacturing, marking another major exit from the London stock market in 2024.
Dowlais, which has been part of the FTSE 250 index since 2023, primarily operates GKN Automotive. This division was originally part of the GKN engineering business, which was acquired by private equity firm Melrose in a contentious £8 billion takeover battle in 2018.
To facilitate the acquisition, American Axle & Manufacturing will invest £1.16 billion in cash and shares, as both companies seek to adapt to the evolving landscape of electric vehicles.
This transaction represents the largest US acquisition of a UK company announced this year, following a famous trend of London-listed companies leaving the market throughout 2024.
An analysis conducted by law firm A&O Shearman indicates that there has been a surge in transatlantic mergers and acquisitions in 2024. This uptick is attributed to the stronger performance of US equity markets, making the UK an appealing target for potential buyers.
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Industry Adaptation and Growth
The announcement of the Dowlais takeover comes shortly after Dowlais’s CEO expressed that the automotive industry’s move to electric vehicles would take longer than anticipated, as many manufacturers have reduced their EV development plans.
Both companies have stated that their merger will “create a leading global manufacturer with the scale, product portfolio, technology, and global diversification required to lead and innovate in a transitioning business environment.”
Dowlais is a key supplier to approximately 90% of the world’s carmakers, employing around 30,000 people globally.
Under the agreement, American Axle & Manufacturing will acquire Dowlais at a rate of 85.2 pence per share, reflecting a 25% premium over Dowlais’s closing share price on January 28.
Following the announcement, Dowlais’s shares surged by as much as 11% on Wednesday before experiencing a slight decline.
Liam Butterworth, CEO of Dowlais, remarked that this merger would establish a company capable of being a leading supplier during the global transition to electrified mobility.