GKN plc announces that GKN Westland Aerospace ("GKN Wae") has entered into a conditional agreement to acquire the business and assets of Dow - UT Composite Products, Inc. ("Dow - UT") from its existing shareholders, the Dow Chemical Company ("Dow") and United Technologies Corporation ("UTC") for a total consideration of $62.5 million (£36.8 million) in cash.
Dow - UT, which is based in the USA with manufacturing activities in Connecticut and Alabama, was created as a joint venture in 1989 by Dow and UTC to exploit their expertise in composite technology to produce structures for the aerospace industry. Dow - UT currently designs and manufactures high performance composite airframe structures and engine components for commercial and military aerospace applications using both conventional, pre-impregnated laminates and resin transfer moulding techniques in which it is an acknowledged market and technology leader. Dow - UT 's major customers include Boeing, Lockheed Martin, General Electric, Pratt & Whitney, Sikorsky and Rolls Royce Allison.
The acquisition, which will be funded from GKN's existing financial resources, is subject to an adjustment to reflect actual net assets at closing and is conditional, inter alia, on certain regulatory and other approvals in the USA.
Dow - UT will have estimated net assets at closing of $72.6 million (£42.7 million) and is being acquired free of debt. As a result of one-off, non-recurring costs and intercompany charges, Dow - UT made a net loss before interest and tax of $7.1million (£4.2 million) on revenues of $80.2 million (£47.2 million) for the year ended 31st December 1997. This result does not reflect true trading performance or the significant potential of Dow - UT in the future given its participation in major US civil and defence programmes and the increasing importance of resin transfer moulding techniques in the manufacture of complicated composite structures.
Dow - UT is expected to be earnings enhancing post the acquisition and will strengthen the capabilities of GKN WAe in composite structures, particularly in the application of resin transfer moulding. The acquisition will also extend GKN WAe's presence in the important US aerospace structures market, providing it with greater access to key customers such as the US aircraft and engine manufacturers.