REDDITCH, England -- GKN plc has announced an agreement to acquire the all-wheel-drive (AWD) components businesses of Getrag KG, the privately held German company controlled by the Hagenmeyer family. The businesses being acquired, together referred to as "Getrag Driveline Products," are Getrag Corp., a joint venture with Dana Holding Corp. based in the United States, and Getrag All Wheel Drive AB, a joint venture with Dana and Volvo Car Corp. based in Sweden.

In conjunction with the agreement, Dana signed definitive agreements to sell its equity in the two joint ventures to Getrag. These transactions are part of the larger transaction between Getrag and GKN. Immediately following the sale of Dana interests in the joint ventures, Getrag will sell these and other assets to GKN.

Dana will receive U.S. $136 million in cash for the equity stakes in the two joint ventures, and will use the proceeds to further strengthen its liquidity position and overall balance sheet. The transaction is contingent upon receiving required regulatory approvals.

The core business of Getrag Driveline Products is the Tier 1 supply of geared driveline products, namely Power Transfer Units (PTU) and Rear Drive Units (RDU) for AWD vehicles, along with Final Drive Units (FDU) for high-performance rear wheel drive vehicles. Current activities also target the future supply of transmission and axle products for hybrid and electric vehicle drivetrains.

GKN says Getrag Driveline Products, which will be integrated into GKN Driveline, is an excellent fit with GKN's existing range of products and technology. With operations in the United States and Europe, Getrag Driveline Products has a product, manufacturing and customer footprint that is complementary to GKN's own geared product business, which is predominantly based in Asia. The combined businesses will be the leading global player in AWD driveline products with an excellent customer base and product portfolio.

Nigel Stein, CEO of GKN Driveline said, "This acquisition is a significant step forward for Driveline, accelerating our strategy for growth in AWD systems and hybrid/electric drivetrains. Production of AWD vehicles is forecast to grow at above market rates reflecting increasing demand globally for crossover vehicles and compact SUVs. Combining our engineering and technology resources will strengthen our ability to provide customers with leading-edge technology, fuel-efficient solutions and to develop next generation drivelines."

As part of the overall transaction, GKN is also acquiring an exclusive license, principally for Europe and the Americas, to Getrag's electric drivetrain technology for use in electric and certain hybrid vehicles.

The acquisition cost comprises a cash consideration of 283 million pounds Sterling for the equity at closing together with further deferred consideration of up to 12 million pounds depending on Getrag Driveline Products' success in achieving future business awards. Presently, Getrag Driveline Products has net cash of approximately 15 million pounds and therefore the current enterprise value, including the deferred element, is 280 million pounds. Closing of the transaction is expected during September 2011, subject to customary conditions and necessary regulatory approvals. The acquisition will be funded from the Group's existing resources.
 
For the last audited year ended Dec. 31, 2010, Getrag Driveline Products achieved consolidated sales of approximately 380 million pounds, EBITDA of 50 million pounds, profit before taxation of 25 million pounds and gross assets were 250 million pounds. The transaction is expected to be earnings enhancing on a management basis from the first full year of ownership. Looking forward, strong growth in Getrag Driveline Products is expected from 2014, as recent new program wins enter production.