American Axle & Manufacturing Holdings Inc., the Detroit-based maker of drivetrain components with longtime roots to General Motors, is attracting preliminary interest from suitors including Melrose Industries Plc, people familiar with the matter told Bloomberg.
London-listed Melrose is weighing a combination of its GKN Automotive unit with American Axle, according to the people, who asked not to be identified because the information is private. A deal could help GKN Automotive build scale in the car-parts industry and gain a public listing in New York.
Shares of American Axle gained as much as 23 percent in New York trading Thursday, the biggest intraday gain in more than two years. They were up 16 percent to $10.57 in afternoon trading, giving the company a market value of about $1.19 billion.
American Axle has also had contact with other industry peers including BorgWarner Inc. and Dana Inc. to gauge their interest in potential tie-ups or asset deals, the people said. It’s unclear whether either party will pursue a transaction, the people said.
Deliberations are ongoing, and there’s no certainty they will result in a deal, the people said. Representatives for Melrose, BorgWarner and Dana declined to comment. A spokesperson for American Axle didn’t respond to emails and phone calls seeking comment.
American Axle has been a steady supplier of drivetrain components to carmakers for decades. But its business model faces pressure from the ongoing shift toward EVs by the likes of Ford Motor Co. and GM.
In May, American Axle denied reports that it was exploring a potential sale.
American Axle was created in 1994 when a group of investors led by former Chrysler Corp. manufacturing chief Richard E. Dauch and also including industrialists Mort Harris and Ray Park and former Volkswagen executive James McClernon bought aging powertrain plants from GM.
American Axle is now led by CEO David Dauch, son of the company’s co-founder.
The discussions come at a time when dealmaking activity is slowing amid turbulent credit markets. Private equity firms in particular have faced difficulty raising affordable financing from traditional banks, leading them to turn to alternative funding sources like direct lenders.
Melrose in September announced plans to split its GKN business into a separate unit headquartered and listed in London that will seek acquisitions in the rapidly-changing car industry. The new company was set to house both drivetrain technology supplier GKN Automotive, and GKN Powder Metallurgy, a maker of metal powder and precision powder metal parts for the auto and industrial sectors.
American Axle ranks No. 43 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $5.2 billion in 2021.
— Crain’s Detroit Business and Bloomberg’s Dinesh Nair contributed to this report.
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