British engineering company GKN (GKN.L) said it agreed to acquire Netherlands-based Fokker Technologies for 706 million euros (452 million pounds), boosting its standing as an aerospace supplier and lifting its shares.
GKN, whose historic roots are in auto-part supply but which has moved into aerospace in the last two decades, said the deal would extend its global reach in the aerospace sector, building on its acquisition of Volvo's aerospace unit in 2012.
Chief executive Nigel Stein said Fokker's activities were complementary and GKN was attracted to its presence in China, Turkey, India and Mexico.
"In our auto business, we're out there all around the world. For some time now we've had the goal of taking aerospace to broader parts of the world and this is a useful step forward in that goal," he told reporters on a call on Tuesday.
Shares in GKN, which had lost about 15 percent of their value over the last month on concerns about the company's exposure to different aircraft programmes and related pricing pressures, were up 6.6 percent to 314.4 pence at 0909 GMT.
Jefferies analyst Sandy Morris, who rates GKN a "buy", called Fokker complementary and said the price was reasonable.
"GKN looks to have continued following the shortest path from A to B; growing away from its legacy liabilities and moving aerospace further towards a world-leading position," he said.
GKN said Fokker's position on two big air programmes, the Airbus (AIR.PA) A350 and the Lockheed Martin (LMT.N) F-35 military jet, were a good fit with its own positions.
The company said that it would fund the 706-million-euro value, which included debt, through a 200-million-pound equity placing and through its existing debt facilities, in a deal which provided an exit for private equity firm Arle Capital.
The acquisition would be earnings accretive in its first full-year, it said, and was expected to deliver cost savings of 3 percent of sales by 2018.
Stein said he was confident of delivering the targeted savings, citing GKN's track record in doing so.
In the United States, Fokker was last year fined for illegally shipping aircraft parts to Iran and other countries, a situation with which GKN said it was comfortable having undertaken due diligence.
"We feel comfortable that there's no material ongoing liability or risk for GKN as part of this," finance director Adam Walker said.
Reporting its half-year results, GKN said its pretax profit rose 4 percent in the period to 307 million pounds, helped by growth in its auto-parts supply business, and repeated guidance for 2015 to be another year of growth.