i dont know... I think the current price is saying it will happen (on balance of probabilities - 70:30 ) |
I wonder if I should listen to the stock market, which is clearly saying that this AXL deal isn't likely to happen. Even though the jump in the AXL share price eventually sort of flowed into the DWL share price, there's still a 10+p gap despite very positive guidance from AXL.
With Trump tariffs being an ongoing theme - this time it's a 25% tariff on all imported cars apparently - automotive components might just be a sector to avoid, despite the bid and potential counter-bid... |
NYSE:AXL significant 11% pre market open lifting Dowlais share price today |
 Investing.com - American Axle & Manufacturing (NYSE:AXL) Holdings Inc reported better-than-expected fourth-quarter results on Friday and provided a positive outlook for 2025, sending its shares soaring 7.37% in pre-market trading.
The auto parts manufacturer posted an adjusted loss per share of -$0.06 for the fourth quarter, beating analyst estimates of -$0.12. Revenue came in at $1.38 billion, slightly below the consensus estimate of $1.39 billion and down from $1.46 billion in the same quarter last year.
For the full year 2024, American Axle reported sales of $6.12 billion, up from $6.08 billion in 2023. The company's adjusted EBITDA rose to $749.2 million, or 12.2% of sales, compared to $693.3 million, or 11.4% of sales, in the previous year.
Looking ahead, American Axle provided an optimistic outlook for 2025, targeting sales between $5.8 billion and $6.05 billion, in line with analyst expectations of $5.92 billion. The company also aims for adjusted EBITDA in the range of $700 million to $760 million. |
AXL dropped and pound firmed, so the offer is now worth 77.5p per share.
The weakness in the share price (now below where it was when the offer was made) doesn't suggest much confidence in the deal going through.
Easy money if it does though, as the share price is currently 15% below the deal price. |
The AXL offer for DWL is now worth 79p, with a further fall in the share price and the pound firming a little against the dollar. |
To me, this says it's all about negotiation. So China sets up a few factories in the US, Canada agrees to import more peanuts, Germany stops selling them tractors and Mercs, and Briton lets him sit next to the King on every visit...
"US President Donald Trump is delaying new tariffs on Mexican imports, after the country agreed to send 10,000 troops to the border to stem the flow of illegal drugs.
Mexico's President Claudia Sheinbaum says the agreement also includes a commitment from the US to take steps to limit the flow of guns south." |
Mexico trade war off... for now. |
Unfortunately there isn't much of a break fee. And even the break fee doesn't look to me like it would be payable if the AAM share price goes so low that DWL shareholders vote against an unsweetened offer.
But a logical result of a tariff war could be consolidation of European car part suppliers - a counter-bid might come from that angle... |
Pre market is showing AXL at $5.05 compared to $5.82 at the time the offer was made.
At the pre market price the offer is now worth 79.85p.
Correction, 80.17p due to the fall in the £ against the $. |
Think this has further to drop watching and waiting for a buy entry point. Would not be suprised that the planned take over does not happen given tarrifs etc and low ball offer. Agree AAM could take a bit of a hammering when the US market opens |
If you actually go onto the Dowlais website to see their list of factories, you'll find that most are located close to major car manufacturer plants around Europe. You don't export completed drive trains from the UK to the US, you set up factories close to your customer.
Dowlais has a couple of factories in the US and Mexico. There might be some impact there, but it's more about the share price of AAM crashing when New York opens. |
davius: Weirdly there is only one US state where the UK is the main trade partner - UTAH...
What is it with the UK and Mormons? |
The UK has a trade deficit with the US so the giant Oompa Loompa would be an idiot to impose tariffs on the UK. Mind you, being an idiot is his speciality so there are no guarantees. |
So far UK is not on any tariff list so that is quite good. Trump likes Brexit... Starmer has said he means to keep brexit.
So I guess, if US cant get parts from Canada or Mexico it can get them from the UK....
I cant see Trump putting tariffs on the UK as otherwise that might upset the Brexit Applecart. |
Keep an eye on the share price of AAM and other US carmakers / component providers...
The automative industry in North America is totally intertwined between Canada, Mexico and the US. Car parts can cross the border several times as raw materials are turned into finished components.
I have no idea to what extent AAM is directly exposed to tariffs, but it won't matter much if GM, Ford, etc. stop buying AAM parts because they can't get the rest of the components needed... |
I wouldnt take any low offer. Its way too cheap.
they should at least get NAV value...
Its nuts... |
Are the BOD in for a sweetner from the bidder...for recommending the deal?... |
Topped up this morning.
The current bid value is about 82p. Even if some shareholders are minded to vote no because it's not a high enough price, retaining 49% of the combined entity probably is convincing enough as upside to obtain shareholder approval. (even though owning US shares is a problem for some)
Add the possibility of a counter-bid and/or a sweetened bid and I think there's value here. |
Do we know why this is so cheap compared to its NAV? |
It does seem to have quite a lot of NAV value compared to its share price..
And quite a nice dividend yield too. |
The above article ends with the following
But Russ Mould, investment director at AJ Bell, said: ‘This is far from a done deal and there is a real chance that Dowlais shareholders push back for a better offer.’ |
I expect a counter-bid. 4x EBITDA, 3 after synergies, isn't nearly enough.
The TI Fluids deal shows me that there's money out there for these sorts of assets. Besides the fact that there's surely a hedge / PE fund out there who might fancy buying Dowlais to sell off Metallurgy separate to the main automotive business.
There's lots of runway here. The London market is so sleepy though. A US company would already be trading above the bid price, in anticipation of a higher bid. |
Register for real-time alerts, custom portfolio, and market movers
Hot Features
Premium
