American Axle & Manufacturing Acquires GKN Powder Metallurgy and GKN Automotive for $1.44B

American Axle & Manufacturing (AAM), a publicly listed supplier of automotive driveline and drivetrain components headquartered in Detroit, has acquired Dowlais Group plc, the parent company of GKN Automotive and GKN Powder Metallurgy, in a $1.44 billion cash and stock deal. AAM shareholders will now own 51 percent of the combined enterprise, with UK-based Dowlais owning the remaining 49 percent.

Melrose Industries, which acquired GKN plc in 2018, demerged GKN Powder Metallurgy, GKN Automotive, and GKN Hydrogen in 2023, after which the latter three companies formed the Dowlais Group, listed on the London Stock Exchange. UK engineering firm Langley Holdings acquired GKN Hydrogen in August 2024.

Dowlais Group will now be delisted from the London Stock Exchange, with the combined group continuing to trade on the New York Stock Exchange as AXL. The new company anticipates that the merger will lead to around $300 million in cost synergies in its first year.

In a press release, the Chairman and CEO of AAM, David C Dauch, said, “This announcement marks another key milestone in our continued long-term strategic growth plan. We are excited to bring together these two outstanding companies to create a leading driveline and metal-forming supplier serving the global automotive industry as it continues to evolve. The combination will create significant immediate and long-term shareholder value while helping to power a more sustainable future. Together with Dowlais, we will have the powertrain-agnostic product portfolio, global reach, commitment to innovation and financial strength to meet the needs of customers and succeed in a dynamic market environment.”

Dowlais’ CEO Liam Butterworth said, “Our shared vision is to be a leading supplier of power-agnostic products as the world transitions to electrified mobility while maintaining operational excellence and driving sustainable growth, improved margins, and stronger cash flow generation. Together, we will unlock significant synergies, accelerate innovation, and position the combined group for long-term success in a dynamic industry. I am incredibly proud of what our team has achieved and excited about the opportunities that lie ahead for the combined group.”

I think this is one of the most promising AM industry merger announcements in years, and has the potential to do for AM in the automotive industry what Nikon’s acquisition of SLM Solutions is doing for AM in the aerospace/defense industry. (Interestingly enough, Nikon and SLM debuted the combined Nikon SLM brand in September 2023 with announcement of a sale to GKN Aerospace.) Along those lines, the AAM/GKN deal illustrates that, for now and for the near future, at least, vertical mergers are still and will likely continue to be far more viable than horizontal ones.

In terms of the automotive industry, specifically, the merger is an especially encouraging sign for the AM industry, insofar as a Tier 1 supplier like AAM has apparently put a premium on bolstering its end-to-end AM capabilities, from raw materials to parts. And, not just in terms of its role as a market signal, but also more directly, the deal bodes well for the broader AM industry, as companies like HP have partnered with GKN Powder Metallurgy for years, suggesting that hardware suppliers could benefit from the acquisition.

Finally, given how large and diversified an operation GKN Powder Metallurgy is, the acquisition gives AAM the potential to branch out into other industries. It’s not clear if AAM has any interest in pursuing that path, but the company’s focus on electrification certainly aligns with the idea of leveraging GKN’s more general strengths.

Images courtesy of GKN Powder Metallurgy