US rival agrees £1.2bn deal for British car parts firm in new hit to UK stock market
The British car parts maker Dowlais has agreed to a £1.2bn takeover by its US rival American Axle & Manufacturing, in the latest departure from the London stock market.
The main operation of Dowlais, which has been listed on the FTSE 250 index since 2023, is GKN Automotive, which formed part of the GKN engineering business that was bought by the private equity group Melrose in an acrimonious £8bn takeover battle in 2018.
American Axle & Manufacturing will pay £1.16bn in cash and shares for Dowlais as the two companies aim to weather the transition to electric vehicles.
The deal is the largest US takeover deal for a UK company announced so far this year, and follows an exodus of London-listed companies during 2024.
There was increased transatlantic mergers and acquisitions activity in 2024, according to analysis by the law firm A&O Shearman, which found that the relative strength of US equity markets made the UK an attractive hunting ground for potential bidders.
The Dowlais takeover comes just months after the CEO of Dowlais said carmakers' switch to electric vehicles would take longer than expected, as several manufacturers scaled back their EV plans.
The companies said that joining together would 'create a leading global manufacturer with the scale, product portfolio, technology and global diversification required to lead and innovate in a transitioning business environment'.
Dowlais, which supplies 90% of the world's carmakers, employs about 30,000 people globally. Under the terms of the deal, American Axle & Manufacturing will acquire it for 85.2p a share, a premium of 25% on the UK firm's closing share price on 28 January. Dowlais shares climbed by as much as 11% on Wednesday, before falling back slightly.
Dowlais's chief executive, Liam Butterworth, said the deal would create a company which could be a leading supplier as the world 'transitions to electrified mobility'.
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Butterworth said last August that European sales of EVs were challenging because of changes to government subsidies and policies supporting the move away from petrol and diesel cars, as the company announced a slide in profits.
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