Volvo air sale to take flight

ENGINEER GKN has moved closer to an £800m deal to buy Sweden’s largest aerospace company.

The British car and plane parts manufacturer is in talks with <a href=""; target="_blank">Volvo</a> over its aircraft business, which was put up for sale in the autumn.

The FTSE 100 firm is believed to be working again with boutique investment bank Gleacher Shacklock, which was adviser when GKN held a £423m rights issue in 2009.

Volvo decided to sell its aerospace arm, which accounts for barely one per cent of sales, as part of a shake-up driven by Olof Persson, who took over as chief executive in September.

Volvo Aero develops and produces components for aircraft, rocket and gas turbine engines, and has a related service and maintenance business. It also makes engines for Saab’s Gripen fighter jets, which are used by the Swedish military.

German jet engine and parts maker MTU Aero, which had been an early favourite, dropped out of the sale process last month.

Yesterday it was reported that GKN has also put its wheels business up for sale. A deal for the firm, which makes parts for construction vehicles, could generate around £130m.

GKN and Volvo declined to comment. Last month GKN reported 2011 pre-tax profits of £417m on revenue 13 per cent higher at £6.11bn.