Hitachi Metals Ltd. will pursue more mergers and acquisitions after unveiling plans to pay $1.3 billion for Wisconsin-based Waupaca Foundry Inc., the largest-ever purchase for the Japanese specialty metals producer.
Waupaca “will make a big contribution to our company as a cash cow and our business base,” Hitachi Metals Chairman Kazuyuki Konishi told reporters today in Tokyo, repeating plans to focus on expansion through acquisitions mentioned by the company after full-year results in April.
The purchase from KPS Capital Partners LP will be financed with cash and debt, according to a statement today from Tokyo-based Hitachi Metals, a subsidiary of Hitachi Ltd. The Japanese metals producer gains four foundries in Wisconsin and two elsewhere in the U.S.
Waupaca is the world’s largest supplier of iron castings, supplying companies in the automotive, agricultural and construction machinery industries, according to the statement.
The move is a step toward Hitachi Metals expanding its iron castings business globally and follows announced purchases this year of two metals businesses in India and an alloy operation from Mitsubishi Materials Corp.
KPS bought Waupaca Foundry in 2012, boosting profit by 40 percent in two years, according to a separate statement from KPS. The foundry, which employs about 3,900 people and was previously owned by Essen, Germany-based ThyssenKrupp AG, had sales of $1.74 billion in its most recent fiscal year.
Hitachi Metals, which traces its origins to the Tobata foundry established in 1910, had revenue of 808 billion yen ($7.9 billion) in the year ended March. The company is also the world’s largest producer of magnets derived from rare earths.
The company’s shares closed up 0.9 percent in Tokyo at 1,734 yen, before the deal was announced.