GKN Powder Metallurgy and GKN Automotive set for AAM takeover in $1.44 billion deal
January 29, 2025
American Axle & Manufacturing (AAM), headquartered in Detroit, Michigan, USA, has agreed terms to acquire Dowlais Group plc, the UK-based parent company of GKN Automotive and GKN Powder Metallurgy. The $1.44 billion deal, consisting of cash and AAM shares, was unanimously agreed by the boards of directors of both Dowlais and AAM.
Upon closing of the transaction, it is expected that AAM shareholders will own approximately 51% of the combined group and Dowlais shareholders will own approximately 49%. The combined company will be headquartered in Detroit and led by David C Dauch, AAM’s Chairman and Chief Executive Officer.
“This announcement marks another key milestone in our continued long-term strategic growth plan,” stated 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. The combination will create significant immediate and long-term shareholder value while helping to power a more sustainable future. Together with Dowlais, we will have the powertrain-agnostic product portfolio, global reach, commitment to innovation and financial strength to meet the needs of customers and succeed in a dynamic market environment.”
GKN Powder Metallurgy and GKN Automotive, together with the rest of the GKN plc, were taken over by Melrose Industries in 2018. In 2023, Melrose announced the demerger of the GKN Powder Metallurgy, GKN Automotive and GKN Hydrogen businesses, forming the new independent holding company, Dowlais Group plc. GKN Hydrogen was acquired by Langley Holdings in August, 2024.
“Today’s announcement marks a significant opportunity to build on the success of Dowlais Group. The combination of the two companies accelerates the execution of our strategy by leveraging our combined scale, resources, capabilities, and outstanding management teams,” added Liam Butterworth, Dowlais’ Chief Executive Officer. “Our product portfolios and technological expertise are highly complementary, positioning us to better serve our customers and exceed their expectations. This transaction also combines our respective strengths in innovation, technology, and talent, creating a solid foundation for delivering long-term value to our shareholders.”
GKN Powder Metallurgy employs over 5,000 people across its 27 manufacturing facilities in nine countries. The company lists 3,000 customers, ships 250,000 tons of metal powder each year and produces around ten million Powder Metallurgy parts each day. Together with GKN Automotive, Dowlais’ businesses comprise over 70 manufacturing facilities in nineteen countries worldwide.
AAM is a Tier 1 automotive supplier that designs, engineers and manufactures driveline and metal forming technologies to support electric, hybrid and internal combustion vehicles. The company has over 75 facilities in sixteen countries. With a combined portfolio of products, the new company is expected to be well-positioned to serve a customer base spanning multiple geographies and support changing propulsion trends.
“Our shared vision is to be a leading supplier of power-agnostic products as the world transitions to electrified mobility while maintaining operational excellence and driving sustainable growth, improved margins, and stronger cash flow generation. Together, we will unlock significant synergies, accelerate innovation, and position the combined group for long-term success in a dynamic industry. I am incredibly proud of what our team has achieved and excited about the opportunities that lie ahead for the combined group,” continued Butterworth.
The combined company expects to achieve approximately $300 million in cost synergies during its first full year of operation. Upon completion, AAM will continue to trade on the New York Stock Exchange under the ticker symbol AXL, with Dowlais de-listed from the London Stock Exchange.
“The Dowlais Board is unanimous in its view that the proposed combination with AAM offers a compelling opportunity to unlock value for our shareholders,” confirmed Simon Mackenzie Smith, Dowlais’ Chair. “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. Importantly, our shareholders will benefit not only from an immediate premium, but also from the significant synergies that this combination will deliver. Whilst the Dowlais Board remain confident in our stand-alone strategy, this transaction creates significant shareholder value while ensuring that our outstanding businesses continue to shape the future of mobility.”
Effective at the closing of the transaction, two independent directors of Dowlais, Simon Mackenzie Smith and Fiona MacAulay, are expected to join the board of the combined group. In addition, four Dowlais executives will be invited to join the AAM executive leadership team.
