American Axle Sells 10 U.S. Iron Foundries

American Axle & Manufacturing Holdings Inc. agreed to sell 10 U.S. ferrous foundries for $245 million to Gamut Capital Management, a New York-based private-equity fund. These plants comprise the remaining Grede Foundries operations that AAM acquired in late 2016 as part of its $3.3-billion takeover of Metaldyne Performance Group.

The sale price consists of $185 million in cash and $60 million in deferred obligations, subject to certain customary adjustments.

“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,” offered Jordan Zaken, founding partner of Gamut. “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.”

The 10 gray and ductile iron foundries had been combined into the Metaldyne Performance Group in 2014 by a consolidation of two forging organizations (Metaldyne and HHI) with Grede Foundries. That iteration of Grede also had been formed by combining the longstanding Grede Foundries organization with Citation Corp., in 2009.

The foundries’ cast products include chassis, suspension and drivetrain components for automotive markets, engine and chassis parts for heavy-duty trucks, and large axle housings and other drivetrain components for heavy equipment and agriculture markets.

American Axle will retain a gray iron foundry at El Carmen, N.L., Mexico, which produces cast iron axle carriers, differential cases, bracket, and other automotive components. The group said the Mexican foundry continues “to provide significant vertical integration benefits to AAM, while also continuing to serve external customers in Mexico and other global markets.”

“The sale of Grede will enable us to streamline our business, accelerate our debt reduction initiatives, and enhance our margin profile,” stated American Axle chairman and CEO David C. Dauch. “We will continue to optimize 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.”