Zeroing on a British company with relatively low valuation by global standards, GM supplier American Axle and Manufacturing (AAM) is acquiring Dowlais Group plc, parent company of transmission, plug-in hybrid system and AWD system manufacturer GKN Automotive.
The transaction sees American Axle acquiring the foreign company for $1.44 billion, paid with a combination of cash and AAM stock, according to the press release.
Transmission and powertrain maker GKN Automotive has been acquired and spun off by several companies over the past few years. American Axle will hold a slight majority interest in the combined entity at 51 percent ownership versus 49 percent by Dowlais.
Regulatory approval still needs to be provided by multiple governmental entities. These include the European Union and the United States government. Furthermore, since Dowlais operates another subsidiary in China, the Chinese government will also get a say in whether the acquisition can go forward.
American Axle, which makes parts for all of the Big Three or Detroit Three automakers – GM, Ford and Stellantis – as well as other car companies, says that the “combined portfolio of products essential in the manufacturing of internal combustion engine (ICE), hybrid and electric vehicles (EV)” will make the merged companies able to “support changing propulsion trends as the industry continues to evolve” – meeting the needs of both ICE and EV makers.
Underlining this point, American Axle CEO David Dauch said “we will have the powertrain-agnostic product portfolio, global reach, commitment to innovation and financial strength to meet the needs of customers.” Dowlais chairman Simon Mackenzie Smith expanded on the theme by stating the partnership will provide “enhanced financial strength, broader diversification and a market-leading product portfolio that spans traditional and electrified powertrain solutions.”
The acquisition is expected by American Axle to provide approximately $300 million in improved profits for the entity within three years of the deal being completed.
American Axle currently provides axles for several GM pickup and full-size SUV nameplates, including the Chevy Silverado, the 2023 Chevy Colorado and the 2023 GMC Canyon. The company also makes the TracRite differential for the GMC Hummer EV, among other parts for GM vehicles.
Comment
I wonder if they will bring back the axle business they took from the USA and sent to Mexico.