UK engineering group GKN confirms Volvo aerospace division agreement


Reuters

ONDON–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 Wednesday, GKN said it would pay 633 million pounds (US$986 million) 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 percent of GKN’s current market capitalization. “This is a highly attractive acquisition for GKN creating a market leader in aero engine components,” GKN Chief Executive Nigel Stein said.

The purchase will give GKN a higher proportion of sales to the civil aircraft industry at a time when many Western governments are slashing defense spending to rein in budget deficits.