There goes another hidden gem of the UK stock market, and the mini-tragedy in this case is that the deal ought to be structured the other way around. It should be Dowlais, the FTSE 250 company whose main business carries the grand historic UK manufacturing name of GKN Automotive, buying its US rival, the Detroit-based American Axle & Manufacturing.

Instead, the transaction is a cash-and-shares offer for Dowlais at £1.16bn, or 85p a share. The terms cannot be described as punchy when you remember that the business was demerged from the FTSE 100 firm Melrose at 120p as recently as 2023.

Dowlais was always the smaller sibling in the old GKN, the mainly aerospace company bought by Melrose in a fiercely fought hostile takeover in 2018. But the demerger and independence was supposed to herald a new era of opportunity for a restructured business that has genuine claims to being world-class in its field. It is the world’s largest maker of drive systems – the bit of the vehicle that connects the wheels to the engine – and looked more likely to be predator than prey in any round of consolidation among global car component manufacturers.

Instead, the opportunity on the table is to fold itself into a US company that is smaller in terms of revenues, stock market value and number of employees (30,000 plays 20,000). No doubt the industrial logic is sound but this is a reverse takeover in effect – thus the need for half the offer price to be in cash to ensure American Axle’s shareholders emerge with 51% of the combined entity.

Dowlais/GKN Automotive’s importance to the UK economy is not what it was, to put it mildly, which is why the deal caused no embarrassment to the chancellor on the day of her big growth speech. The UK operational base shrank with the rest of the automotive industry over the generations; the last UK plant, at Erdington in Birmingham, was closed on Melrose’s watch in 2021. Annual global revenue is £5bn but this UK-headquartered company has just 37 UK-based staff.

The urge to merge also flows from global factors. The stop-start nature of the transition to electric vehicles is causing havoc everywhere, from VW to Nissan. At the end of the supply chain, suppliers are also obliged to seek savings – and Dowlais and American Axle think they can find an annual $300m (£240m) in synergies.

But, in another respect, this transaction should be painful for a UK chancellor. Or, at least, it underlines a problem Rachel Reeves has identified herself: the sleepy state of the bottom end of the UK stock market. Outside the FTSE 100 index, and especially around the £1bn-ish level, even quality companies struggle to grab investor attention.

In a different world, Dowlais’ well-regarded management would be able to grab the steering wheel themselves and summon support for a bid for American Axle. In reality, there’s not a chance of that happening. Thus another UK company will join the long list of those departing the London stock market (assuming the deal survives the initial 9% drop in the US firm’s stock price).

There’s no quick way to revive investor interest in the likes of Dowlais. Cutting stamp duty on shares would help, as this column has argued repeatedly, but the rest of the script is about prodding, cajoling and incentivising UK pension funds to pay more attention to their home patch. Efforts in that direction have already taken an age. While we wait, the crisis in the UK stock market gets worse.