GKN to buy Stromag in £174m deal
Engineering giant GKN has closed a £174m deal to acquire Stromag Holding GmbH. Stromag, which manufactures industrial power management components, will be integrated into the Redditch-based company's land systems division. The deal comprises £146m cash consideration for the equity of Germany-based Stromag and £28m for the repayment of debt.
Stromag is a privately held company whose shareholders include Equita GmbH & Co, Holding KGaA and several private investors.
The company manufactures hydraulic clutches and electro-magnetic brakes.
It is is headquartered in Unna, Germany, and has operations in Germany, France, USA, Brazil, India and China.
The deal was announced this morning through the Stock Exchange.
When the deal is finalised, cash consideration of €164m (£146m) will be paid for the equity as well as €31m (£28m) for debt repayment.
Closing of the transaction is expected during September, said GKN, subject to customary conditions and necessary regulatory approvals. The acquisition will be funded from GKN's existing cash resources.
The news comes amid speculation that GKN is the target of a potential takeover by Shanghai Automotive Industry Corporation (SAIC). No comment has been provided by the company, but its shares leapt 7.5 pence to 245 pence on talk of a possible 350 pence-a-share bid from SAIC.
For the last audited year ended 31 December 2010, Stromag reported sales of €111m (£99m), pre-tax profit of €10m (£9m) and gross assets were €103m (£92m).
In 2011, sales are expected to be about €140m (£125m).
Andy Reynolds Smith, executive director of GKN, said: "The acquisition of Stromag is an important step in the implementation of the GKN Land Systems' strategy to build a global leader in industrial power management, extending our capability in electro mechanical components.
"In combination with our existing business, it will provide a strong platform to accelerate growth in existing markets, together with access to a number of attractive new industrial segments including renewable energy."
