British car and plane parts manufacturer GKN is moving closer to clinch an £800 million ($1.3 billion) deal to buy Volvo's aircraft business after other suitors dropped out of the race for Sweden's largest aerospace company, The Sunday Times yesterday reported without citing source of the information.

With Germany's MTU Aero Engines and private equity firms Carlyle Group and Nordic Capital pulling back, GKN, the maker of lightweight parts for Airbus and Boeing jets has emerged as the clear frontrunner for Volvo Aero, which makes engines as well as parts for aircrafts including Saab's Gripen fighter jet.

The report said that the GKN has appointed investment bank Gleacher Shacklock to lead negotiations to buy the Volvo business and to raise about £130 million through the sale of its wheels business, which makes parts for construction vehicles.

In November 2011 Volvo Aero had put itself up for sale in order to focus on trucks and construction equipment after having moved away from manufacturing cars in 1999 when it sold Volvo Cars to Ford Motors for $6.45 billion.

Volvo Aero was formed in 1930 by locomotive manufacturer Nohab Flygmotorfabriker AB to supply 40 aircraft engines to the Swedish Board of Aviation. Since then the company have been the major engine supplier to the Swedish Air Force.

Volvo Aero makes the RM12 engine for Saab's Gripen combat jet fighters and also supplies engine parts to jet engine manufacturers Rolls Royce, GE and Pratt & Whitney.

Apart from its headquarters and manufacturing facility at Trollhättan in Sweden, Volvo Aero has facilities in Kongsberg, Norway, Connecticut, in the US and a product development centre in Bangalore, India.

Its components are installed in more than 90 per cent of all large commercial aircraft engines sold. The company had sales of £616 million last year.

Redditch, Worcestershire-based GKN, formerly known as Guest, Keen and Nettlefolds, makes aerostructures, propulsion systems and transparencies, plus a number of specialist products, including electro-thermal ice protection, fuel and flotation systems, and bullet resistant glass for the aerospace and the automobile industry. 

Its aerospace unit is a major supplier of complex composite structures and is the world leading supplier of cockpit transparencies and passenger cabin windows.

It also makes lightweight parts for Airbus and Boeing jets on the Isle of Wight and in Bristol, and has a joint venture with Rolls-Royce to produce lightweight turbine blades for aircraft engines.

Last month GKN reported full-year pre-tax profits of £417 million on sales of £6.1 billion.