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Investing.com -- American Axle & Manufacturing (NYSE:AXL) Holdings Inc. (NYSE: AXL), a leading automotive supplier, has agreed to acquire UK-based Dowlais in a deal that values the European auto parts maker at approximately £1.16 billion.
The transaction terms offer 85.2 pence per Dowlais share, combining 0.0863 new American Axle shares, 42 pence in cash, and up to 2.8 pence as a final cash dividend for each share of Dowlais.
The acquisition represents a 25% premium over Dowlais’s share price as of the close on January 28. Upon completion, Dowlais shareholders will hold about 49% of the combined entity, with the remaining 51% being held by American Axle shareholders. David Dauch, American Axle’s current chairman and CEO, is set to lead the merged organization.
American Axle anticipates that the merger will generate significant annual cost synergies, estimating around $300 million, which the company expects to realize substantially by the end of the third year following the deal’s completion.
Part of the cost-saving measures includes a potential headcount reduction of up to 2.5% of the total workforce of the combined group.
The combined company will establish its global headquarters in Detroit, Michigan. In light of the proposed acquisition, Dowlais has halted its previously announced share buyback program and plans to recommend that its shareholders vote in favor of the acquisition.
Financial advisory roles were prominent in the deal, with JPMorgan assisting American Axle, while Dowlais was advised by Barclays (LON:BARC) and Rothschild.
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