3rd Aug 2006 07:02
GKN PLC03 August 2006 For immediate release 3 August 2006 New leadership positions for GKN following US acquisitions GKN plc of the UK today announces two acquisitions in the US Aerospace andOffhighway sectors. The acquisition of Stellex Aerostructures combined with GKN's existing advancedaerospace metals business will create a leader in titanium aircraft and enginestructures. And the acquisition of Rockford Powertrain will create the offhighway industry'sleader in driveshafts for construction, mining and agricultural equipment. Kevin Smith, Chief Executive of GKN plc, said: "We have been highly selective inthe way we scrutinize acquisition candidates. "These two acquisitions are the outcome of our rigorous insistence on buyingbusinesses which provide technology and market leadership and which fit with ourcapabilities. Stellex and Rockford will jointly contribute $200 million to our2007 revenues and will make a good contribution to Group profits and futuregrowth." See detailed announcements below. For further information: GKN Corporate Communications+44 (0) 20 7463 2354 GKN to acquire US aerospace group and create leading titanium structuresbusiness GKN plc of the UK today announces that it has agreed to acquire StellexAerostructures of the US - a leading specialist in the manufacture of complex,metal structural components for the aerospace industry. The combination of GKN's existing advanced composite structures and metalsbusiness with the operations of Stellex will create a leading manufacturer oftitanium aircraft and engine structures. GKN is already a world leader in advanced composite structures and issuccessfully taking advantage of the growth in composite content in both civiland military aircraft. There is also a growth trend in the use of titanium,which has complementary material properties and provides enhanced tensilestrength with low weight. Titanium structures will account for approximately 20% of the weight of the newF-35 Joint Strike Fighter and 15% of the Boeing 787 airliner - more than twicethe levels of the aircraft they replace which will drive a doubling in titaniumusage within the industry over the next ten years. Approximately 65% of Stellex revenues are on civil aircraft which increasesGKN's exposure to this sector. Stellex has secured strong positions on marketleading civil programmes such as the Boeing 787 and 777 and in defence has astrong position on the F-35. Stellex employs approximately 650 people on three US sites in New York, Kansasand California and has current revenues of more than $120 million with a strongfuture growth profile. GKN is acquiring the business, with reported gross assetsof $71 million at December 31, 2005, from the Carlyle Group and management, theterms of which have not been released. The consideration will be satisfied fromexisting resources. Marcus Bryson, Chief Executive of GKN Aerospace said: "The creation of a leading manufacturer of titanium structures is complementaryto our established composites strategy. "Stellex is a highly regarded, premium supplier and fits very well with ourexisting activities in the US. Together we will be one of the aerospaceindustry's leading independent suppliers of complex, high performance, titaniumstructures -well positioned to capitalise on the significant long term growth intitanium content on new commercial and military aircraft. "Based on current long term agreements with a range of customers and the growthdemand for titanium structures we expect this acquisition to make a strongcontribution to our growth strategy in aerospace." The acquisition is subject to certain regulatory approvals and completion isexpected later this year. US acquisition transforms GKN into global OffHighway Driveshaft leader GKN plc of the UK today announces the acquisition of Rockford Powertrain of theUS, a producer of high speed driveshafts focused on the construction and miningequipment sector. Rockford's high speed driveshafts are complementary to GKN's current, low speedproducts which are aimed primarily at the agricultural equipment sector. The newly-combined product portfolio will satisfy the increasing demand by majororiginal equipment manufacturers to consolidate the sourcing of their offhighwaydriveline systems purchases from a single lead supplier. Based in Illinois, Rockford employs 185 people in the US and has outsourced anincreasing proportion of its manufacturing to low labour cost countries,principally China, while retaining a strong US engineering and technicalpresence. GKN is acquiring the business for a consideration of $50 million which is beingmet from existing resources. Rockford has current annual revenues of $60million. Martyn Vaughan, Chief Executive of GKN OffHighway, said: "This acquisition fitsclosely with our strategic criteria for OffHighway. It improves our penetrationof both the US and construction sectors - 95% of Rockford's sales are in the USwith more than 85% going to construction and mining equipment manufacturers.Rockford also enjoys a low cost manufacturing base and its products areacknowledged as technology world leaders." The construction industry has enjoyed buoyant growth for the past three yearsand these conditions are expected to continue. Rockford's driveshafts, which connect the engine and drive axles to a vehicle'stransmission operate at up to 6,000 rpm and can handle power outputs from 150 to2500 horsepower. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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