Dowlais Group PLC (LSE:DWL), the former auto parts arm of GKN, is to merge with US rival American Axle (AAM) through a cash and share deal worth £1.16 billion or 85.2p per share.
In a statement, AAM and Dowlais said combining the two businesses would generate significant value in areas such as driveline and metal technologies for petrol cars and EVs.
On completion, Dowlais shareholders will own 49% of the enlarged business and AAM investors the remainder.
Cost synergies of $300 million are predicted through job cuts allied with purchasing and operational improvements.
David C Dauch, AAM’s boss will be the chairman and chief executive of the combined group.
Under the deal, which has been recommended by its board, Dowlais shareholders will receive 0.0863 new NYSE-listed AAM shares plus 42p in cash.
Shares in Dowlais rose 7.7% to 73.6p.