American Axle & Manufacturing Holdings, Inc. (AAM), (NYSE:AXL) and Metaldyne Performance Group Inc. (MPG) (NYSE:MPG) have announced that the companies have entered into a definitive merger agreement under which AAM will acquire MPG for approximately $1.6 billion in cash and stock, plus the assumption of $1.7 billion in net debt. The transaction has been unanimously approved by the boards of directors of both companies and is anticipated to close in the first half of 2017 subject to shareholder and regulatory approval and other customary closing conditions.
“AAM’s transformational acquisition of MPG brings together two complementary Tier 1 organisations to create a company with greater scale and increased diversity across products, customers and end markets,” stated 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 fuelling growth and delivering value to our shareholders,” added Dauch.
AAM is a world leader in the manufacturing, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems, electric drive systems and metal-formed products. In addition to locations in the United States (Michigan, Ohio, and Indiana), AAM also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, Scotland, South Korea, Sweden and Thailand. AAM has approximately 13,000 employees globally.
MPG is a leading provider of highly-engineered components for use in powertrain and suspension applications for the global light, commercial and industrial vehicle markets. The company 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.
Under the terms of the agreement, each share of MPG’s common stock will be converted into the right to receive $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%.
“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,” stated George Thanopoulos, MPG’s Chief Executive Officer.