Auto supplier American Axle & Manufacturing Holdings (AXL) is buying Dowlais Group, a specialist engineering firm in the UK, for $1.44 billion.
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Deal Could Drive Revenues and Savings
Detroit-based American Axle said the cash and stock deal would create a global provider of products for gas-powered, hybrid and electric vehicles, generating annual revenues of around $12 billion. It will also, the company said, deliver approximately $300 million in annual savings in the first year.
Dowlais, which makes driveline systems and other automotive parts, operates in more than 20 countries. The company was created in 2023 after it spun off from aerospace firm Melrose Industries. It was previously known as GKN Automotive but changed its name to Dowlais – this was the Welsh town where GKN started business in 1759. It had been reported in 2023 that Melrose had considered combining GKN Automotive with American Axle in 2023 but no deal materialised.
American Axle Hopes Size Matters in New Auto Market
The combined group hopes size will matter as the auto industry tries to navigate through several challenges such as volatile demand for electric vehicles, economic uncertainties and the global expansion of Chinese EV makers. These factors have largely sent American Axle’s shares down 28% over the last 12 months. However, news of the deal did little to boost the stock with shares down in pre-market trading.
After completion of the deal, Dowlais shareholders will own approximately 49 percent and AXL shareholders will own the remainder. “This announcement marks another key milestone in our continued long-term strategic growth plan,” said David C. Dauch, American Axle’s Chairman and Chief Executive Officer.
The deal comes at a pivotal time for the auto industry in the US and globally. This follows President Trump’s executive orders to scale back on incentives and targets for the electric vehicle sector in the US as well as threats to impose tariffs on big auto markets China and the EU.
Is AXL a Good Stock to Buy Now?
On TipRanks, AXL has a Hold consensus based on 1 Buy and 3 Hold ratings. AXL stock’s consensus price target is $7.38 implying an 26.8% upside.
