Asahi Tec on Friday confirmed earlier reports it would acquire US rival Metaldyne Corp. for $1.2bn, or about JPY 13.73bn yen, in an attempt to shore up its global supply chain.
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Asahi Tec’s overseas operations will benefit from Metaldyne’s strong business bases in North America, Europe, China, South Korea, India and Brazil, the Japanese firm said, according to Kyodo News.
Asahi Tec chairman Shoichiro Irimajiri, speaking at a news conference in Tokyo, reportedly said automakers ”are looking for a global supplier and Asahi Tec wants to conform with this trend to be a worldwide parts manufacturer.”
Shizuoka-based Asahi Tec plans to turn Metaldyne into a wholly owned subsidiary by merging a special purpose company set up for the acquisition with the US firm on 17 November.
Asahi Tec is to pay about JPY25.2bn in cash to shareholders of Metaldyne through the special purpose company.
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By GlobalDataMajor Metaldyne shareholders will then use most of the cash to purchase new Asahi Tec shares through private placement.
Asahi Tec said after the deal that Metaldyne chairman and chief executive officer Timothy Leuliette will serve as co-chairman along with Irimajiri and co-CEO along with Asahi Tec President Akira Nakamura.
”This partnership gives both companies the opportunity to build a strong presence in our traditional markets respectively and grow rapidly in other regions around the world,” Leuliette reportedly said at the news conference in Tokyo.
With respect to the acquisition, RHJ International, Asahi Tec’s largest shareholder and the holding company of US buyout firm Ripplewood Holdings, will join Japanese trading house Mitsui & Co. and an investment partnership to purchase about JPY22bn in new Asahi Tec shares through private placement, the report said.
Mitsui said it would buy some JPY12bn worth of new Asahi Tec shares to obtain a 20% stake in the auto parts maker.
Of the proceeds from the share issue, Asahi Tec said it would use about JPY20.4bn to repay part of Metaldyne’s interest-bearing debt totaling more than JPY120bn.
Asahi Tec, established in 1916, has facilities in Japan, Thailand and China, and operates in business fields such as those related to aluminium wheels, casting and electric power equipment.
It has 3,700 group employees and its sales for the year through March 2006 totaled JPY57.9bn.
Metaldyne, which has some 6,500 employees, posted sales of about JPY220bn in the year to the end of last December. The Michigan-based company is a major global designer and provider of metal components.
After the acquisition, Mitsui will become the second-largest shareholder of Asahi Tec with about 21% ownership, following RHJ International’s 38%, Kyodo News said.
