GKN snaps up Germany’s Stromag in £174m deal to boost land unit

ENGINEERING giant GKN has secured a £174m deal to take over Germany’s Stromag, a leading manufacturer of clutches and brakes.

The business is being bought from a private equity firm, a group of investors and management for a total of €164m (£146m) in cash and the transfer of €31m of Stromag’s debt, GKN announced yesterday.

The business will go into GKN’s Land Systems division which builds major parts for vehicles mainly used in farming, mining and construction.

Stromag’s core products include hydraulic clutches, electro-magnetic brakes and flexible couplings.

Its headquarters are in Unna, Germany and it has operations in Germany, France, USA, Brazil, India and China.

Last year Stromag reported sales of €111m (£97.4m), profit before tax of €10m and gross assets of €103m.

GKN said it expected sales for this year to be around the same level and that the acquisition price was somewhere between 7.5 and eight times earnings.

Executive director Andy Reynolds Smith said: “In combination with our existing business this [acquisition] will provide a strong platform to accelerate growth in existing markets, together with access to a number of attractive new industrial segments including renewable energy.”