American Axle acquires Metaldyne Performance for US$ 3.3 billion, three Mexican plants included
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American Axle & Manufacturing Holdings, Inc. (AAM) and Metaldyne Performance Group Inc. (MPG) announced a definitive merger agreement under which AAM will acquire MPG for approximately US$ 1.6 billion in cash and stock, plus the assumption of US$ 1.7 billion in net debt, both companies revealed in a press release (PDF).
"The combination brings together highly complementary businesses and forms a premier, global Tier 1 supplier with broad capabilities across powertrain, drivetrain and driveline product lines, as well as diversified customer base and end-markets," said the statement.
MPG is a leading provider of highly-engineered lightweight components for use in powertrain and suspension applications for the global light, commercial and industrial vehicle markets.
The company produces these components and modules using complex metal-forming manufacturing technologies and processes for a global customer base of vehicle OEMs and Tier I suppliers. MPG has a global footprint spanning more than 60 locations in 13 countries across North America, South America, Europe and Asia with approximately 12,000 employees.
In Mexico, MPG operates three facilities. A site located in Aguascalientes produces transfer cases and AWD parts, gears, sprockets and several engine components.
A plant in Ramos Arizpe, Coahuila, produces powder metal connecting rods, machined connecting rods and machined vibration dampers. A third facility located in El Carmen, Nuevo Leon, manufactures axle carriers, differential cases, brackets and turbo housings.
AAM owns two production sites both located in Silao, Guanajuato. AAM's Guanajuato Manufacturing Complex is a 2009 Shingo Prize winner facility that manufactures rear-axle assemblies, propeller shafts, driveline systems and forging components.
AccuGear Silao produces precision differential gears and assemblies to support a variety of AAM customers and programs.
Under the terms of the agreement, each share of MPG's common stock will be converted into the right to receive US$ 13.50 per share in cash and 0.5 share of AAM common stock. Upon closing of the transaction, AAM's shareholders will own approximately 70% of the combined company and MPG's shareholders will own approximately 30%.
"AAM's transformational acquisition of MPG brings together two complementary Tier 1 organizations to create a company with greater scale and increased diversity across products, customers and end markets," said David C. Dauch, AAM's Chairman and Chief Executive Officer. "MPG's expertise in complex, highly-engineered powertrain components and its global footprint will be tremendous assets to AAM. We are excited about the powerful industrial logic in this combination that will allow us to create additional value for our customers and other key stakeholders. Together, we are forming a company with increased earnings potential and enhanced cash flow generation that will allow us to rapidly reduce leverage while fueling growth and delivering value to our shareholders."
George Thanopoulos, MPG's Chief Executive Officer, added, "This compelling transaction offers MPG shareholders an immediate premium and significant participation in the growth potential of the combined organization and its talented associates. MPG and AAM share a similar culture and value system, laser focused on quality, operational excellence and technology leadership, which creates a natural fit and clear path to value creation for stakeholders of both companies."