GKN has announced it is to take over German engineering company Stromag for £174 million to bolster their land operations division based in Redditch.
The deal comprises £146m cash consideration for the equity of Germany-based Stromag and £28m for the repayment of debt – amounting to £174m.
Stromag is a private company whose shareholders include Equita GmbH and Co Holding, KGaA and a number of other notable international organisations and individuals. The company manufactures hydraulic clutches and electro-magnetic brakes, and is to be integrated into GKN’s land systems division.
Closing of the deal is expected in September said GKN. The takeover deal will be funded from GKN’s current cash resources.
The news comes at a time of speculation over rumours that GKN is the target of a potential acquisition by Chinese group Shanghai Automotive Industry Corporation (SAIC). GKN has not made any comments on this rumour, but its shares leapt 7.5p to 245p on talk of a possible 350p-a-share bid from SAIC.
Andy Reynolds Smith, executive director of GKN, said in a statement: “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,” he added.