GKN confirms Volvo Aero deal for RM3.2b
LONDON, July 5 — British engineering group GKN has agreed to buy the aerospace division of the world's number two truck maker Volvo to boost the capacity and range of its engine component portfolio to meet booming demand.
Confirming a Reuters report from yesterday, GKN said it would pay 633 million pounds (RM3.2 billion) for the aero engine division, comprising 513 million pounds of equity value, an anticipated pension settlement of 50 million pounds and working capital refinancing of 70 million pounds.
The deal will be funded by new debt and a placing of 140 million pounds, representing around 5 per cent of GKN's current market capitalisation.
“This is a highly attractive acquisition for GKN creating a market leader in aero engine components,” GKN Chief Executive Nigel Stein said.
“With excellent technology and strong life-of-programme positions on most civil aero engines, Volvo Aero will significantly enhance GKN Aerospace's engine components business.”
The purchase will give GKN a higher proportion of sales to the civil aircraft industry at a time when many Western governments are slashing defence spending to rein in budget deficits. — Reuters