Manufacturing group disposes of German subsidiary in £177m deal
WEST Midlands engineering group GKN has sold a German subsidiary in a deal worth almost £177m.
The announcement comes just five years after the Redditch-based group purchased Stromag Holdings in an undisclosed deal.
GKN has sold the business, which it had integrated into its Land Systems division, to US-based Altra Industrial Motion.
The deal is for €184m (£164m) in cash and the transfer of debt-like obligations of approximately €14m (£13m); representing a total value of €198m (£177m).
Completion of the transaction is expected to take place in the first quarter of 2017 subject to a workforce consultation and in France and Germany and merger control clearance in Germany.
Stromag, based in Unna, near Dortmund, supplies brakes, clutches and highly flexible couplings to the agricultural, construction, industrial and renewable energy markets. Total sales in 2015 were €131m (£117m).
While by its strong automotive (Driveline) and aerospace divisions, GKN’s Land Systems division has been undergoing a difficult period.
Organic sales were down 6% last year due to challenging conditions in the agricultural and construction equipment markets.
Nigel Stein, chief executive of GKN, hinted at this is the statement announcing the sale.
He said: “I would like to thank the Stromag team for their dedication over the past five years. Stromag has been a good investment for GKN despite challenging end markets and I am confident that Altra is an excellent home for the business.
“Altra is well positioned to invest in the business to meet the future growth opportunities in its markets.
“For GKN this sale helps sharpen our focus and allows us to redeploy capital into our core aerospace and automotive businesses.”
GKN will release its latest trading update on Tuesday (October 25).