British automotive firm Dowlais Group has agreed to a £1.16 billion ($1.44 billion) cash-and-shares takeover by U.S. manufacturer American Axle & Manufacturing, the companies announced Wednesday. The transaction is expected to position the merged entity as a leading global supplier of automotive components.

The boards of American Axle & Manufacturing Inc. and Dowlais Group PLC confirmed they have reached terms on a recommended offer. As a result, Dowlais—comprising the former automotive and powder metallurgy divisions of GKN—will be delisted from the London Stock Exchange.

Financial Terms and Shareholder Benefits

Under the deal, existing Dowlais shareholders will receive 0.0863 new shares in American Axle and 42 pence in cash for each Dowlais share they own. Additionally, Dowlais will issue a final cash dividend of up to 2.8 pence before the transaction closes.

A "mix and match" arrangement will allow shareholders to adjust the proportion of cash and shares they receive. The offer values each Dowlais share at 85.2 pence, representing a 25% premium over its Tuesday closing price of 68.35 pence. By midday Wednesday, Dowlais’ stock had surged nearly 13% on the FTSE 250 index.

Upon completion, Dowlais shareholders will control 49% of the combined company, while American Axle shareholders will retain 51%.

Legal and Financial Advisors

American Axle’s legal team: Allen Overy Shearman Sterling

Dowlais’ legal team: Slaughter and May (UK), Cravath Swaine & Moore LLP (U.S.)

Financial advisers:

American Axle: J.P. Morgan Securities LLC

Dowlais: Barclays Bank PLC, Rothschild & Co.

Corporate brokers: Barclays, Investec Bank PLC

Strategic Goals and Expected Cost Savings

Both companies specialize in technology for internal combustion, electric, and hybrid vehicles. They believe the merger will create a top-tier global supplier in the evolving automotive industry.

American Axle expects the combination to yield $300 million in annual cost savings within three years of completion.

"We are excited to bring together these two outstanding companies to create a leading driveline and metal-forming supplier serving the global automotive industry," said David Dauch, chair and CEO of American Axle.

Regulatory Approvals and Timeline

The deal will proceed through a scheme of arrangement under the UK Companies Act 2006, requiring at least 75% shareholder approval at a general and court meeting. Specific dates have yet to be announced.

Dowlais' directors, who hold 0.3% of the company’s shares, unanimously support the transaction.

"Our shareholders will benefit not only from an immediate premium but also from the significant synergies this combination will deliver," said Simon Mackenzie Smith, chair of Dowlais.

The merger is expected to close in 2025, pending regulatory approvals in the U.S., European Union, China, Brazil, and Mexico, as well as American Axle shareholder consent for issuing new shares.

As part of the agreement, Dowlais will cancel its previously announced £50 million share buyback program.