American Axle & Manufacturing (AAM) has announced a significant acquisition deal with UK-based car parts maker Dowlais Group. The deal, valued at approximately $1.44 billion, is set to create a leading global driveline and metal-forming supplier for the automotive industry. The merger aims to offer a comprehensive product portfolio catering to internal combustion engine (ICE), hybrid, and electric vehicles (EV).
As per the agreement, Dowlais shareholders will receive 0.0863 new AAM common stock shares, 42 pence in cash per share, and up to 2.8 pence of Dowlais’ FY24 final dividend for each Dowlais share prior to the deal’s closure. Post-transaction, AAM shareholders are expected to hold a 51% stake in the combined entity, with Dowlais shareholders owning the remaining 49%.
The deal represents a 25% premium over Dowlais’ closing share price on January 28, 2025, and a 45% premium over the volume-weighted average share price for the past three months. The combined company is projected to generate approximately $300 million in synergies, leading to high margins, strong earnings accretion, cash flow, and a robust balance sheet.
The improved financial profile resulting from the merger is anticipated to facilitate investments in growth initiatives and accelerate debt reduction. Both the boards of directors at AAM and Dowlais have unanimously approved the transaction, which is expected to conclude by the end of 2025, subject to shareholder and regulatory approvals.
After the closure, the combined company will be headquartered in Detroit, Michigan, under the leadership of AAM chairman and CEO David C Dauch. Additionally, two independent Dowlais directors, Simon Mackenzie Smith and Fiona MacAulay, are slated to join the board of the new entity.
J.P. Morgan is offering exclusive financial advice and committed debt financing to AAM, with legal counsel from Allen Overy Shearman Sterling. Dowlais has enlisted Barclays Bank and Rothschild & Co for financial advice, along with legal guidance from Slaughter and May.
The acquisition marks a significant milestone in the automotive industry, positioning the combined entity as a powerhouse in driveline and metal-forming solutions for a wide range of vehicles, including ICE, hybrid, and EVs. The deal underscores the industry’s ongoing evolution towards sustainable mobility solutions and robust supply chain partnerships.
