GKN plucks Volvo Aero from the sky for £633m

Posted on 5 Jul 2012

British engineering group GKN has paid £633m for turbine maker Volvo Aero, in a move to consolidate its position in the global aerospace industry.

The deal is expected to enhance GKN’s earnings per share on a management basis as well as generating a favourable ROI in invested capital – exceeding the group’s pre-tax weighted average cost of capital of 12%.

Volvo Aero is a large section of Volvo itself, employing over 3,000 people spread across several continents. The company designs, engineers and manufactures a wide range of components for aerospace firms – mainly aircraft engine turbines.

It supplies all the best known aircraft engine manufacturers, and has positions on most major civil aerospace platforms which are set to increase as aircraft build rates ramp up.

Chief executive at GKN Nigel Stein told local press: “This is a highly attractive acquisition for GKN, creating a market leader in aero engine components. Volvo Aero will significantly enhance GKN Aerospace’s engine components business.”

Mr Stein added: “Volvo Aero has invested heavily to secure positions on new engine programmes, offering [GKN] 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.”