American Axle Shares Surge Higher Despite Dismissing Takeover Reports

American Axle & Manufacturing Holdings (NYSE: AXL) dismissed reports of a takeover on Monday.

Late Friday, Bloomberg reported that the manufacturer of automobile driveline and drivetrain components and systems was exploring a potential sale. The article cited sources familiar with the matter as stating that a leveraged buyout through a private equity firm was a likely option, although its net debt of $2.67 billion at the end of March could be a stumbling block.

However, AAM refuted the rumors, saying in a statement on Monday they "are not engaged in a process to sell the company."

The company added that it is currently focused on executing its stand-alone strategy and while it "regularly consider strategic opportunities that serve the best interests of the company," they are not in talks regarding a sale at this time.

Following the Bloomberg report on Friday, RBC Capital analyst Joseph Spak said in a note to clients that "conceptually, a sale makes sense."

"The company could face headwinds as the industry, and AXL's important truck programs, shift from ICE [Internal Combustion Engines] to BEV [Battery Electric Vehicles]. While AXL has made some progress on winning electric vehicle business, the company will need to continue to invest for this transition, and we believe that even at a fuller ramp the margin profile for the electric business could be below what AXL currently enjoys," added Spak.

American Axle stock jumped 11% Monday.

By Sam Boughedda

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