GKN Acquires Volvo Aero for SEK 6.9 Billion (633 Million Pound)

july 10 2012

GKN plc apprised about its agreement to acquire Volvo Aero (the aero engine division of AB Volvo). Volvo Aero designs, engineers and manufactures components and sub-assemblies for aircraft engine turbines. It supplies all the major aero engine manufacturers and has positions on most major civil aerospace platforms that are set to increase as aircraft build rates ramp up. Volvo Aero employs some 3,000 people based in Sweden, Norway and the USA.

Nigel Stein, Chief Executive, GKN plc, said: "This is a highly attractive acquisition for GKN creating a market leader in aero engine components. 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 acquisition enterprise value is SEK 6.9 billion comprising SEK5.6 billion of equity value (consideration) together with an anticipated Volvo Aero pension settlement (50 million pound) and working capital refinancing (70 million pound). The acquisition is expected to complete during the third quarter, subject to regulatory approvals. It will be funded by new debt and a 140 million pound placing of new ordinary shares, representing approximately 5% of GKN's current market capitalization.

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