Though rumours have been circulating regarding the buy-out since the beginning of the year, GKN has at last officially agreed to buy Volvo’s aerospace and engines division for £633million ($986m) with a statement to the London Stock Exchange. The purchase will be funded through a combination of new debt and a £140million placing of new shares, representative of five percent of GKN’s current market capitalisation.
GKN hopes the deal with help secure a future refocus to civil aircraft following continuing government cut backs on defence spending.
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Nigel Stein, CEO, GKN, said:
“This is a highly attractive acquisition for GKN creating a market leading 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.”
“Volvo Aero has invested heavily to secure positions on new engine programmes, offering 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.”
Though GKN is recognised as a world leader in the manufacturing of aircraft structures, it previously couldn’t produce the advanced engine components specialised in by Volvo Aero, with the CEO concluding:
“GKN Aerospace will now be a leader in the aero engine sector, complementing its leading position in composite aero structures.”
Should the agreement by approved by regulatory bodies, it is expected that the purchase will be finalised in the third quarter of 2012.