Insider Media Limited

Engineering giant GKN has made its second major acquisition in a fortnight. The Redditch-based company has bought the all-wheel-drive (AWD) components businesses of Getrag KG for up to £295m. As part of the transaction, GKN is also acquiring an exclusive licence for Getrag's electric drivetrain technology.

GKN will buy the privately held German company for an initial cash consideration of £283m, as well as further deferred consideration of up to £12m. The company said the total payable amount would depend on Getrag Driveline Products' success in achieving future business awards.

Under the deal, two businesses have been acquired, together referred to as Getrag Driveline Products. They are Getrag Corporation, a joint venture with Dana Corporation based in the United States, and Getrag All Wheel Drive AB, a joint venture with Dana Holding Corporation and Volvo Car Corporation based in Sweden.

Getrag Driveline Products is the supplies geared driveline products, for high performance rear wheel drive vehicles.

The company will be integrated into GKN's Driveline division.

As part of the deal, GKN is also acquiring an exclusive licence, mainly for Europe and the US, to Getrag's electric drivetrain technology for use in electric and hybrid vehicles.

Nigel Stein, chief executive of GKN Driveline said: "This acquisition is a significant step forward for Driveline, accelerating our strategy for growth in AWD systems and hybrid/electric drivetrains. Production of AWD vehicles is forecast to grow at above market rates reflecting increasing demand globally for crossover vehicles and compact SUVs. Combining our engineering and technology resources will strengthen our ability to provide customers with leading-edge technology, fuel-efficient solutions and to develop next generation drivelines."

Getrag Driveline Products has net cash of bout £15m. Closing of the transaction is expected during September 2011, and the acquisition will be funded from the company's resources.

On 18 July, GKN announced it would acquire Germany-based Stromag Holding GmbH for £174m. At the time, the company said the purchase was "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".