American Axle to Merge with Dowlais in $1.44 Billion Deal

American Axle & Manufacturing Holdings Inc. has agreed to merge with UK-based Dowlais Group Plc in a transatlantic automotive deal. The cash-and-share transaction values Dowlais at approximately £1.16 billion ($1.44 billion), representing a 25% premium to its January 28 closing share price.

Key Terms of the Deal:

* American Axle shareholders will own 51% of the combined company, while Dowlais shareholders will control the remaining 49%.
* The transaction is expected to generate cost synergies of around $300 million.
* Dowlais shares rose by 13% in London trading before slightly easing back.

Industry Context:

The deal aligns with the industry trend of consolidation among auto suppliers facing pressure from the shift towards electric vehicles. American Axle has been a key supplier of drivetrain components to automakers, but the business has been impacted by the transition to EVs. Dowlais, created in 2023, emerged from Melrose Industries Plc's spinoff of its GKN Automotive unit.

Strategic Rationale:

* The merger aims to achieve economies of scale and reduce costs through combined operations.
* The deal could spur further transatlantic M&A activity following the re-election of President Donald Trump.
* UK Prime Minister Keir Starmer has pledged to enhance economic ties with the US, potentially creating opportunities for cross-border deals.

Financial and Legal Advisors:

* Barclays Plc and Rothschild & Co. advised Dowlais.
* JPMorgan Chase & Co. acted as financial advisor to American Axle.