GKN buy Volvo Aero for £633m
Worcestershire-based engineering group GKN have agreed to buy the aero division of Volvo for £633m.
It marks the final stages of AB Volvo’s divestment of their aero division, which has been ongoing since November 2011.
Volvo’s CEO Olof Persson, said: “GKN is a strong new owner for Volvo Aero. GKN will provide Volvo Aero with the best possible conditions for continued advancement in its industry.”
A basic premise for the divestment was that any new owner must offer Volvo Aero a structure to grow in.
Mr Persoon added: “Volvo Aero has attracted considerable interest, but in our opinion, GKN can offer the best conditions for Volvo Aero’s future advancement.
“This transaction will improve our chances to further refine and develop our core business in commercial vehicles, while providing Volvo Aero with an owner that has both the drive and the capacity to advance and strengthen the company.”
The transaction is due for completion during the third quarter of 2012, subject to regulatory approvals.
It will be funded by new debt and a £140m placing of new ordinary shares, representing approximately 5% of GKN’s current market capitalisation.
Nigel Stein, Chief Executive, GKN plc, said: “This is a highly attractive acquisition for GKN creating a market leader in aero engine components.
“With excellent technology and strong life-of-programme positions on most civil aero engines, Volvo Aero will significantly enhance GKN Aerospace’s engine components business.
“Volvo Aero has invested heavily to secure positions on new engine programmes, offering a long-term platform for growth.
“Its strong standing with customers, together with its skilled workforce and high quality engineering team, will be a valuable addition to GKN Aerospace.
GKN Aerospace will now be a leader in the aero engine sector, complementing its leading position in composite aero structures.“
Business Secretary Vince Cable said: “This is good news for the UK aerospace sector and I welcome the fact that a UK company has the confidence to pursue a takeover of this scale.
“This builds on the already impressive range of capabilities that GKN has. Our aerospace sector, which employs 100,000 people, is world class and through deals such as this continues to bolster its position as Europe’s largest.
“It’s particularly welcome coming just a few days ahead of the Farnborough International Airshow, where the world will come to the UK to see the strengths we have as a nation in this industry.”
This was posted in Bdaily's Members' News section by Tom Keighley .