The car parts arm of GKN looks set to be sold to a US rival in a £1.2billion deal six years after Melrose’s hostile takeover of the British engineer.
Dowlais, spun out of GKN in 2023, will be snapped up by American Axle in a blow to London’s stock market.
Corporate raider Melrose bought GKN for £8billion in 2018 in a move that faced fierce opposition over fears the 266-year-old company would be split up and sold off.
Melrose restructured it, axing hundreds of jobs as it closed a plant in Birmingham.
It then spun off GKN’s automotive division under the name Dowlais while retaining the aerospace business.
FTSE 250-listed Dowlais will leave London’s stock market after just two years in a major setback for the exchange, if shareholders approve.
Takeover: Car parts maker Dowlais, spun out of GKN in 2023, will be snapped up by American Axle in a blow to London’s stock market
The merged firm will be listed in New York and based in Detroit, Michigan. Following the deal, Dowlais’ London office in Victoria will close.
Chief executive Liam Butterworth, who will pocket £928,500 – 150 per cent of his £619,000 base salary – to oversee the merger, said the move will allow it to ‘adapt and be flexible to how the industry is evolving’, including the global challenges facing the transition to electric vehicles.
The company will have 50,000 employees, with 1,250 jobs at risk after the merger.
Duplicate corporate, head office, administrative and senior management positions, which could amount to around 40 UK jobs, are in the firing line.
Manufacturing, and research and development jobs in the US and Europe are also at risk. The businesses expect to reap £242million in savings.
The takeover values Dowlais’ shares at 85.2p each. American Axle shareholders will own 51 per cent, while Dowlais shareholders will own around 49 per cent.
Butterworth, who will leave after the deal completes, has a 0.17 per cent stake in Dowlais that will be worth nearly £2million, according to Refinitiv.
Butterworth said conversations with shareholders had been ‘overwhelmingly supportive’.
But Russ Mould, investment director at AJ Bell, said: ‘This is far from a done deal and there is a real chance that Dowlais shareholders push back for a better offer.’
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