A&O Shearman, Slaughters shepherd American Axle’s £1.16bn acquisition of UK car parts group Dowlais

Cravath also called in for deal that continues exodus of companies from London Stock Exchange

A&O Shearman and Slaughter and May are advising on Detroit-based American Axle & Manufacturing’s £1.16bn acquisition of Dowlais, the former automotive division of UK engineering firm GKN. 

The cash-and-stock deal will see American Axle acquire Dowlais, a world leader in drive systems – the components that transfer power from the engine to the wheels – for 85.2 pence a share, representing a premium of 25% to the closing price on Tuesday. 

It comes as the two companies seek greater scale to weather the transition to electric vehicles and continues an exodus from the London Stock Exchange, which last year suffered its highest net outflow of businesses since the financial crisis in the face of high interest rates, dwindling pension funds and a lack of committed domestic investors.  

A transatlantic A&O Shearman team is acting for American Axle on the deal, while Slaughters is acting for Dowlais. Meantime Cravath Swaine & Moore is representing Dowlais as US counsel in connection with the transaction.

The A&O Shearman team is led by M&A partners Scott Petepiece and Roger Morscheiser in New York and Seth Jones and Nick Withers in London. Partners Ben Gris in New York and Dominic Long in London are advising on antitrust matters, while partners Gordon Mak in New York and Jane Glancy in London are advising on the financing of the transaction.

Petepiece and Morscheiser also acted for American Axle in a number of matters while practising at legacy Shearman & Sterling prior to its merger with Allen & Overy last year, including its $1.6bn acquisition of NYSE-listed Metaldyne Performance Group in 2016. They also guided the company’s acquisition of US Manufacturing’s Mexican operations in 2017. 

Meantime the Slaughters team is led by corporate partners Robert Innes, Natalie Cook and Richard Hilton. Other partners working on the matter include Isabel Taylor (competition), Philippa O’Malley (incentives and employment), Charles Cameron (pensions), Dominic Robertson (tax) and Ed Fife (financing). 

Slaughters had long acted as an advisor to GKN, including on a £200m share placement in 2015 and its £8bn hostile takeover by listed turnaround specialist Melrose in 2018. Melrose turned to Simpson Thacher & Bartlett for advice on the deal, and did so again to spin off GKN’s automotive branch in 2023, when it was renamed as Dowlais. The company’s shares have fallen by more than half since its listing in London as a standalone business. 

The Cravath team guiding Dowlais on the American Axle deal is led by M&A partners George Schoen, who also co-led a Cravath team that advised GKN on the US aspects of the Melrose takeover, and Claudia Ricciardi. It includes partners Ron Creamer (tax), Eric Hilfers (executive compensation and benefits) and Margaret Segall (regulatory).  

American Axle said the Dowlais deal would provide a stronger balance sheet, a more diversified business model and an expanded geographical footprint “as the industry transitions to alternate propulsion technologies”. It is expected to create a company with roughly $12bn in annual revenue and generate around $300m in annual cost savings in the first full year following its close. 

Dowlais shareholders will own 49% of the combined group following the merger, with American Axle owning the rest. American Axle’s chief executive, David Dauch, will head the combined group while two members of the Dowlais board will join the new board.

The deal is expected to close by the end of 2025, subject to approval by both sets of shareholders, regulatory approvals and satisfaction of customary closing conditions.

JP Morgan is acting as exclusive financial advisor to American Axle on the deal and is providing committed debt financing for the transaction. Meantime Barclays Bank and Rothschild & Co are acting as financial advisors to Dowlais. 

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