American Axle & Manufacturing Holdings, Inc. (AAM), has announced that it has entered into a definitive agreement to sell its US iron casting operations – Grede – to funds managed by Gamut Capital Management for an aggregate purchase price of USD245m.
Across ten manufacturing facilities, Grede develops, manufactures, assembles and supplies ductile, grey, and specialty iron castings and machined components for automotive, commercial vehicle and industrial markets. For the full year 2018, Grede generated USD781m in sales (USD741m excluding intercompany transactions).
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
"The sale of Grede will enable us to streamline our business, accelerate our debt reduction initiatives and enhance our margin profile," said AAM's Chairman and Chief Executive Officer, David C. Dauch.
"We will continue to optimise and invest in our highly-engineered product portfolio, focus on profitable growth opportunities including electrification, and further strengthen AAM's value proposition to all key stakeholders."
Jordan Zaken, Founding Partner of Gamut, said: "Grede is a market-leading supplier of high-performance, mission-critical castings with national scale, a blue-chip customer base and significant opportunities for growth. We are excited to partner with Grede and its dedicated employee base in its next chapter as an independent company focused on operational excellence and best-in-class delivery for its customers."
AAM will retain its El Carmen, Mexico iron casting operations. The company said the El Carmen Manufacturing Facility will continue to provide significant vertical integration benefits to AAM, while also continuing to serve external customers in Mexico and other global markets.
The USD245m sale price will consist of USD185m in cash and a USD60m deferred payment obligation, subject to certain customary adjustments. Net cash proceeds will primarily be used to repay outstanding indebtedness. The transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions, including the receipt of regulatory approvals.
