American Axle’s Major Acquisition Draws Scrutiny from Ratings Agency

A pivotal acquisition designed to transform American Axle & Manufacturing into a global driveline leader is now facing heightened scrutiny. S&P Global Ratings has revised its outlook for the automotive supplier from “stable” to “negative,” signaling concerns over the financial risks associated with its planned takeover of Britain’s Dowlais Group.

The primary catalyst for this revised assessment is the massive $2.3 billion financing requirement for the acquisition. S&P has expressed significant apprehension regarding integration risks and potential short-term cash flow constraints. The agency projects that by 2025, the company’s leverage ratio could surge to 4.5 times its EBITDA?a level that typically raises red flags for institutional investors.

Strategic Ambitions Meet Financial Reality

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