American Axle & Manufacturing Holdings Inc. (AAM) and Metaldyne Performance Group Inc. (MPG) 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 combination brings together highly complementary businesses and forms a premier, global Tier 1 supplier with broad capabilities across powertrain, drivetrain and driveline product lines, as well as diversified customer base and end-markets.
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 percent of the combined company and MPG’s shareholders will own approximately 30 percent. 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.
Concurrent with the signing of the merger agreement, AAM entered into a voting agreement with an affiliate of American Securities LLC, the controlling stockholder of MPG, pursuant to which American Securities LLC has agreed to vote in favor of and otherwise support the transaction, subject to the terms of the voting agreement. Following the transaction, an affiliate of American Securities LLC will own approximately 23 percent of the combined company.
“AAM’s transformational acquisition of MPG brings together two complementary Tier 1 organizations to create a company with greater scale and increased diversity across products, customers and end markets,” said David Dauch, AAM’s chairman and CEO. “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 fueling growth and delivering value to our shareholders.”
George Thanopoulos, MPG’s CEO, added, “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.”
David Dauch will continue to serve as chairman and CEO of AAM, which will remain headquartered in Detroit. Effective as of the closing of this transaction, AAM’s board of directors will be expanded to 11 members with three designees of American Securities LLC joining AAM’s current board, including George Thanopoulos.
