(Bloomberg) — American Axle & Manufacturing Holdings Inc., a maker of drivetrain components, has agreed to combine with UK peer Dowlais Group Plc in a transatlantic automotive deal.
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A cash-and-share deal valued at about £1.16 billion ($1.44 billion) represents a premium of around 25% to Dowlais’ Jan. 28 closing share price, according to terms released on Wednesday. Shareholders of American Axle will own 51% of the combined company, with Dowlais shareholders controlling the rest. The companies expect the combination to provide cost synergies of around $300 million.
The transaction, confirming an earlier Bloomberg News report, would be the biggest announced US-to-UK transaction so far this year, according to data compiled by Bloomberg.
Dowlais shares climbed as much as 13% in Wednesday trading in London, before easing back slightly, valuing the company at nearly £1 billion. The stock is down about 19% in the past 12 months.
The deal could raise hopes of further transatlantic activity after the reelection of US President Donald Trump triggered the “animal spirits” of dealmaking. British Prime Minister Keir Starmer just this week pledged to grow the UK economy as he eyes a better trading relationship with the US.
Based in the US auto industry’s heartland in Detroit, American Axle has supplied drivetrain components to carmakers for decades. However, its business model has faced pressure from the shift toward electric vehicles by the likes of Ford Motor Co. and General Motors Co.
Dowlais was created in 2023, when industrial buyout firm Melrose Industries Plc spun off and renamed its drivetrain technology supplier that was previously known as GKN Automotive. Melrose acquired the British aerospace and automotive company GKN in 2018 after a hostile takeover battle before separating the businesses.
The shift to electric and hybrid vehicles from combustion engines has jacked up pressure on some of the biggest automotive suppliers. Drivetrain players like American Axle, Dowlais and Dana Inc. have previously explored consolidation to gain scale and lower costs.
In fact, London-listed Melrose flirted with a combination of its then-GKN Automotive unit with American Axle in 2022, people familiar with the matter said at the time. American Axle also had contact with other industry peers including BorgWarner Inc. and Dana to gauge their interest in potential tie-ups or asset deals, the people said at the time.
Bloomberg News reported in October that Maumee, Ohio-based Dana was exploring a sale of its off-highway business, as the automotive supplier contends with sluggish demand in its key markets.
Shares of American Axle have declined more than 30% in the last 12 months. The stock was down 5% at 10:24 a.m. in New York, giving the company a market value of $649 million.
Dowlais was advised by Barclays Plc and Rothschild & Co., while JPMorgan Chase & Co. acted as financial adviser to American Axle.
(Updates shares from fourth paragraph, adds graph.)
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