Alcoa Sells Automotive Castings Business
A private equity group has agreed to buy Alcoa Inc.'s Alcoa Automotive Castings operations for an undisclosed price, completing the sale that has been expected for several weeks. Alcoa announced its intent to divest the business in April, and in its quarterly earnings statement in October the group announced a sale was near.
Monomoy Capital Partners L.P. is a New York fund that says it invests in "middle market companies that require operational or financial restructuring." In 2006 Monomoy acquired Casting Technology Co. from Amcast Industrial Corp. CTC produces aluminum automotive components using a squeeze casting process.
Also in 2006 Monomoy purchased Rossborough Supply Co. Inc., which included Magnesium Aluminum Corp., a diecaster of aluminum and magnesium steering wheels, steering columns, engine brackets and airbag enclosures; and SRC, a manufacturer of magnesium flux refining agents.
“Monomoy is committed to improving our portfolio companies by adding complementary assets and taking advantage of unique industry opportunities like those in the automotive supply chain,” stated partner Justin Hillenbrand. He predicted more similar acquisitions in the coming months.
AAC operates plants in Fruitport, Michigan, and Farsund, Norway, where it uses low-pressure casting to produce suspension and chassis components, including sub-frames, cradles, steering knuckles, engine brackets, and control arms.
Alcoa continues to produce other automotive components; but it is still in the process of divesting other divisions marked for sale, specifically its global packaging and consumer products operations.
Monomoy plans to merge AAC into its Compass Automotive Group L.L.C., a holding company it formed in July 2007.
According to Hillenbrand, “The acquisition of Alcoa Automotive Castings is a perfect example of our investment thesis: AAC was a non-core asset for Alcoa but it is an ideal partner for Compass that we can improve and grow.”
"Alcoa Automotive Castings is a proven market leader with leading technology, well-regarded products and a strong industry position,” stated Compass CEO Craig Conaty. “Compass’ acquisition of AAC is an important part of our strategy to consolidate Tier II automotive suppliers and enables us to offer a full range of cost-effective, safety-critical component solutions to Tier I suppliers throughout the world.”
The investor now describes Compass as a "$220-million manufacturer and the leading North American supplier of safety-critical aluminum and magnesium components for chassis and suspension applications." It has recruited former Toyota Motor Manufacturing Kentucky executive Gary L. Convis to the board of directors of Compass, "to help Monomoy build Compass into an industry-leading automotive platform."
[Source: Foundry Management & Technology, November 6,2007]