American Axle & Manufacturing has agreed to buy Dowlais Group for about $1.44 billion in a cash-and-shares deal that will result in another U.K. company leaving the London stock market.
American Axle’s offer represents a 25% premium on Dowlais’ closing price on Tuesday and a 45% premium on the average share price of the London-listed firm over the past three months.
The companies’ joint announcement on Wednesday said American Axle, which is listed on the New York Stock Exchange, will own 51% of the combined entity, and Dowlais’ shareholders will hold the remaining 49%.
The transatlantic group expects to benefit from a stronger cashflow and balance sheet by generating annual revenues of about $12 billion, while delivering $300 million in savings that are expected to be substantially achieved by the end of the third year after the transaction is completed.
The deal also promises to give the combined group an expanded geographic presence and “support changing propulsion trends as the industry continues to evolve.”
The two companies produce a range of automotive parts for internal combustion engines, hybrids and electric powertrains. They operate within a wider auto industry that’s undergoing a costly transition to electric vehicles, while facing increasing competition from Chinese manufacturers.
The deal is the latest of a series of takeovers by private equity and foreign buyers that are shrinking the U.K.’s stock market. Last year, one in 20 of all U.K.-listed companies was publicly put under offer, according to investment bank Peel Hunt.
Dowlais has been listed in London since April 2023, when it was spun off by Melrose Industries. The auto-parts company traces its history back to the Dowlais Ironworks that was initially founded in South Wales in 1759.
A series of takeovers and mergers led the company to be rechristen as Guest Keen & Nettlefolds, or GKN, which was later bought by Melrose Industries in 2018. Melrose kept GKN’s aerospace operation and spun out the rest of the group. Dowlais’ stock has slumped 38.5% since its debut on the London Stock Exchange.
Dowlais says it currently employs about 30,000 people and operates more than 70 manufacturing facilities in 19 countries.
American Axle is headquartered in Detroit, Michigan. The company has more than 75 facilities in 16 countries, where it primarily manufactures drivetrain components.