American Axle to acquire Dowlais for $1.4bn

April 2025 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

April 2025 Issue

American Axle and Manufacturing (AAM) has agreed to acquire GKN Automotive owner Dowlais in a $1.14bn cash and stock deal.

Under the terms of the deal, Dowlais shareholders will receive 0.0863 shares of new AAM common stock, 42 pence per share in cash and up to 2.8 pence of a Dowlais full year 2024 final dividend prior to closing for each share of Dowlais’ common stock held. Upon closing of the transaction, it is expected that AAM shareholders will own approximately 51 percent of the combined group and Dowlais shareholders will own approximately 49 percent. The offer represents a 25 percent premium on Dowlais’ closing price on Tuesday 28 January, the day before the deal was announced, and a 45 percent premium on the company’s average share price over the three months prior to the agreement.

According to a statement announcing the deal, 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.

“This announcement marks another key milestone in our continued long-term strategic growth plan,” said David C. Dauch, chairman and chief executive of AAM. “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,” he continued. “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.”

“The Dowlais Board is unanimous in its view that the proposed combination with AAM offers a compelling opportunity to unlock value for our shareholders,” said Simon Mackenzie Smith, chair of Dowlais. “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,” he added.

“Today’s announcement marks a significant opportunity to build on the success of Dowlais Group,” said Liam Butterworth, chief executive of Dowlais. “The combination of the two companies accelerates the execution of our strategy by leveraging our combined scale, resources, capabilities, and outstanding management teams. 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.

“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,” he continued. “Together, we will unlock significant synergies, accelerate innovation, and position the combined group for long-term success in a dynamic industry.”

Dowlais has been listed in London since April 2023, when it was spun off by Melrose Industries. The company traces its history back to the Dowlais Ironworks that was initially founded in South Wales in 1759.

Richard Summerfield