The Independent – London

LONDON, England -- GKN, the automotive components and aerospace group, strengthened its position in the U.S. by paying approximately $200 million to acquire two companies. The group, which still has some $763 million left over from $1.9 billion of its half stake in the helicopter maker AugustaWestland, has bought Rockford Powertrain, which makes drive-shafts for the construction industry, and an aerospace firm Stellex Aerostructures. Together, the two companies will bring in about $200 million of additional revenues. Analysts estimate GKN paid about one times sales for the businesses.

The two acquisitions came as GKN reported a 9 percent rise in underlying first-half profits to approximately $213 million, towards the top end of forecasts - driven by strong demand for civil aircraft and a return to profitability for the company's U.S. sinter metals business.

But GKN said it expected raw material costs to be $9.5 million - $11.4 million higher in the second half, while its energy bill would increase by $9.5 million.

Kevin Smith, who is overseeing a move to relocate more of GKN's manufacturing capacity to low labor cost countries, said he expected the group's Chinese workforce to triple to 6,000 in the next four to five years.

(C) 2006 The Independent - London. via ProQuest Information and Learning Company; All Rights Reserved

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