American Axle Agrees to Acquire Dowlais at $1.44B to Expand Globally

Transaction Overview - American Axle & Manufacturing Holdings Inc (AAM) has agreed to acquire Dowlais Group plc for approximately $1 44 billion in a cash and share deal [1] - The transaction will combine essential product portfolios for internal combustion engine hybrid and electric vehicle manufacturing improving cost efficiency and positioning the new entity to serve a diverse customer base across multiple regions [2] - Dowlais shareholders will receive 0 0863 new AAM shares per Dowlais common stock 42 pence per share in cash and up to 2 8 pence from Dowlais' full-year 2024 final dividend [3] - Post-transaction AAM shareholders will hold around 51$300 million in synergies with strong earnings accretion high margins robust cash flow and a solid balance sheet [6] - In 2023 the combined company generated approximately $12 billion in revenues with AAM expecting significant earnings boost in the first full year post-transaction [7] - The cash portion of the deal will be financed through a combination of cash on hand and debt maintaining a neutral net leverage position at closing before synergies [7] Governance & Transaction Details - The boards of both AAM and Dowlais have unanimously approved the transaction with the new company headquartered in Detroit MI and David C Dauch continuing as Chairman and CEO [8] - Two independent Dowlais directors and four Dowlais executives will join the board and leadership roles within AAM respectively [8] - The acquisition will be carried out through a Court-sanctioned scheme of arrangement under the UK Companies Act 2006 with the transaction expected to close by the end of 2025 subject to approvals [9] - AAM will continue trading on the NYSE under the "AXL" ticker while Dowlais' shares will be delisted from the London Stock Exchange post-transaction [10] Industry Context - AXL currently carries a Zacks Rank 3 (Hold) while other auto stocks like Geely Automobile Holdings Limited (GELYY) Yamaha Motor Co Ltd (YMHAY) and Allison Transmission Holdings Inc (ALSN) are ranked higher [11] - GELYY is expected to see significant year-over-year growth in fiscal 2025 sales and earnings with EPS estimates improving by 15 cents and 38 cents for fiscal 2025 and 2026 respectively [12] - YMHAY and ALSN also show positive growth trends with improved EPS estimates for 2025 [12][13]