LONDON (ShareCast) - Engineering group GKN provided a boost to the automobiles and parts sector on Thursday after firm announced that it had agreed to acquire Volvo Aero.

The group raised £140m this afternoon after completing a placing of 70m shares, with the funds going towards the £633m purchase of the aero engine division of AB Volvo. The remaining money it owes AB Volvo would come from new debt facilities, the firm said.

GKN Chief Executive, Nigel Stein, said: "This is a highly attractive acquisition for GKN creating a market leader in aero engine components".

Meanwhile, analysts at Investec said that the terms of the purchase were better than expected, with the acquisition price and equity raise both lower than some had predicted, while the forecasted returns are higher.

Investec said that these terms will "allay lingering market fears that have weighed on the stock".

Sector peers Torotrak and Transense Technologies were also giving the auto sector a boost today.

Top performing sectors so far today
Automobiles & Parts 4,842.13 +10.99%
Mining 18,231.65 +0.90%
Technology Hardware & Equipment 700.50 +0.71%
Mobile Telecommunications 4,211.63 +0.67%
Aerospace and Defence 3,800.56 +0.44%

Bottom performing sectors so far today
Industrial Metals & Mining 2,815.57 -2.28%
Construction & Materials 3,443.71 -1.76%
Chemicals 8,153.24 -1.36%
Financial Services 4,793.97 -0.97%
Fixed Line Telecommunications 2,501.16 -0.85%

BC

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