CHICAGO Hitachi Metals Ltd. has agreed to acquire Waupaca Foundry Inc., the worlds largest supplier of iron castings, from private equity firm KPS Capital Partners LP for $1.3 billion.
The deal, expected to close in October pending customary closing conditions, would effectively make Hitachi Metals the worlds biggest global supplier of iron castings, the Tokyo-based materials manufacturer said Aug. 19.
"We consider it a tremendous opportunity to acquire (the) overwhelmingly large production capacity, wide business domain and solid customer base of Waupaca, which will fuel the growth of our iron casting business," Hitachi Metals said.
The company currently has an annual casting capacity of 192,000 tonnes, and primarily makes knuckle arms and engine components for automakers in Europe and Japan, Hitachi Metals said.
The Waupaca, Wis.-based foundry, in contrast, sports an annual capacity of nearly 1.6 million tonnes, most of which is shipped to vehicle and machinery manufacturers in North America, Hitachi Metals added.
The deal would boost Hitachi Metals growth prospects by adding high-volume, low-cost capacity to its existing but smaller niche castings business, the company said. The acquisition also will give the Japanese company a strong presence in the growing North American automotive sector, in addition to other key end markets, including commercial vehicles, agriculture and construction machinery, it added.
"We are thrilled to join Hitachi Metals, which has the resources, foundry experience, access to capital and global reach that will enable Waupaca to achieve an even higher level of success," Waupaca Foundry chief executive officer Gary Gigante said in a statement Aug. 19.
Gigante also praised New York-based KPS Capital Partners, which he said has invested significantly in Waupacas operations and staff, resulting in expanded production capacity and a more than 40 percent surge in profitability over the past two years.
KPS Capital Partners bought the Waupaca foundry from German steelmaker ThyssenKrupp AG in 2012 (amm.com, May 16, 2012). ThyssenKrupp Waupaca Inc. was renamed Waupaca Foundry following the acquisition (amm.com, July 5, 2012).
Waupaca Foundry has hired 200 people and expanded production at all six of its foundriesfour in Wisconsin and one each in Tennessee and Indianasince the acquisition by KPS Capital, it said.
KPS Capitals investment in Waupaca has generated strong returns for investors and showcased the private equity firms "ability to see value where others do not," KPS co-founder and managing partner David Shapiro said in a statement. "We recognized the transformation of the North American iron foundry market and the unrivaled importance of Waupaca to its customers and the end markets that it serves."
Waupaca has more than 3,800 employees at six locations, and sports a melting capacity of 9,500 tons per day, according to its website.