GKN plc today announces that it has completed the acquisition of the 51% equity interest that it does not already own in Velcon S.A. de C.V. (“Velcon”), its Mexican constant velocity joint (“CVJ”) joint venture.
The consideration for the acquisition from Desc, S.A. de C.V (“Desc”) of the shares in Velcon and expansion land adjacent to the current facility was $83 million (£44 million), and will be satisfied in cash out of existing resources. 51% of Velcon’s net assets were 507 Peso million (£23 million) and profits, before taxation provisions, attributable to the 51% were 105 Peso million (£5 million) based on the most recent audited accounts for the twelve months ended 31 December 2003. The balance sheet at completion will contain net cash of at least $12 million (£6 million). 51% of any surplus cash over and above this amount will be paid to Desc. The acquisition is expected to be earnings accretive.
Arthur Connelly, CEO of GKN Driveline Driveshafts, said: "This is an important step in the realisation of the CVJ manufacturing strategy announced in March last year. Taking full control of Velcon will build on our successful joint venture relationship with DESC and enable us to fully integrate Mexico into our global supply chain.”
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