NEW YORK (TheStreet) -- Shares of American Axle & Manufacturing (AXL) were dropping 14.81% to $14.15 on heavy trading volume early Thursday afternoon after the auto-parts maker agreed to purchase Metaldyne Performance (MPG) for $1.6 billion in cash and stock.
Metaldyne Performance stock was soaring 41.78% to $20.27 on heavy trading volume this afternoon.
Under the terms of the transaction, Metaldyne shareholders will receive $13.50 a share in cash and half an American Axle share, or about $21.81 per share total. This represents a premium of 52.5% to Metaldyne's Wednesday's closing price of $14.30.
The deal also includes the assumption of $1.7 billion of Metaldyne's debt. It is expected to close in the first half of 2017.
American Axle said the transaction should be accretive to cash flow and per-share earnings in the first full year after the deal closes. The combined company anticipates synergies between $100 million and $120 million by 2018.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.
American Axle's strengths such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income are countered by weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.
You can view the full analysis from the report here: AXL
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.