GKN, a UK-based component manufacturer for Airbus jets, has received clearance from the European Commission (EC) to acquire Volvo Aero, the aircraft engine division of Swedish truck maker AB Volvo, for £633m.
EC said that its investigation has revealed the acquisition would not limit the supply options to customers and the merged company would not stifle competition in the European economic area (EEA).
In July, GKN announced its plans to acquire Volvo Aero as part of its strategy to bolster its presence in the civil aircraft industry.
The UK company plans to raise £493m in debt and £140m in a share sale to fund the deal, which is expected to be complete in the third quarter of this year.
GKN expects the transaction to contribute to its earnings per share (EPS) in 2013, and deliver improved returns on the investment.
GKN’s aerospace business is involved in manufacturing parts for civilian and combat jet liners and helicopters, and operates manufacturing facilities in Bristol and Cowes on Isle of Wight.
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By GlobalDataIt has contracts to supply components to the Airbus A380, Airbus A350 and Boeing’s 787 Dreamliner.
In 2011, the company’s aerospace business generated revenues of £1.48bn in 2011, accounting for 24% of its total revenue.
Volvo Aero manufactures components for aircraft engine makers such as General Electric, Pratt & Whitney and Rolls-Royce Holdings.
In 2011, Volvo Aero generated £600m in revenue and £75m in EBITDA.
