Dowlais Group (DWL) M&A Announcement summary

Deal rationale and strategic fit

• The merger creates a leading, diversified global driveline and metal-forming supplier with significant scale and a powertrain-agnostic product portfolio across ICE, hybrid, and electric vehicles.

• The combination enhances geographic reach and customer diversification, reducing dependence on North America and GM, and positioning the group to serve a broad range of automotive segments and regions, including strong foundations in China.

• Both companies bring complementary strengths in axles, sideshafts, all-wheel drive, electrification, and metal-forming technologies, enabling innovation and resilience.

• The deal leverages Dowlais’s strong presence in Europe and Asia, and AAM’s in North America, for global reach.

• The expanded board and leadership team will include Dowlais executives and directors, blending talent from both organizations.

Financial terms and conditions

• Dowlais shareholders receive 0.0863 new AAM shares, £0.42 per share in cash, and up to £0.028 final dividend per Dowlais share.

• The total consideration is approximately £1.44 billion in cash and AAM shares, with a total implied value of 85.2 pence per Dowlais share, representing a 25% premium to the prior closing price.

• The deal implies a 4.1x 2023 adjusted EBITDA multiple pre-synergies, and 3x post-synergies.

• Dowlais shareholders will own about 49% and AAM shareholders about 51% of the combined group post-completion.

• Fully committed financing includes $2.2 billion in new debt, with day-one net leverage expected to be neutral and 2.5x after synergies.

Synergies and expected cost savings

• Annual run-rate cost synergies of $300 million are targeted, with 60% realized by end of year two and full run-rate by year three post-close.

• Synergies will come from SG&A (30%), purchasing (50%), and operations (20%), including workforce optimization, elimination of duplicate costs, and supply chain efficiencies.

• The cost to achieve synergies is expected to be about $300 million, front-loaded over the first two years, net of ~$22 million anticipated dis-synergies.

• Additional synergy opportunities may be identified post-close, especially in operational footprint consolidation.