AK Steel has signed an agreement to acquire an automotive engineering company for $360 million in cash.
Headquartered in Ontario, Precision Partners Holding Company is a North American company that provides engineering, tooling, die design and hot and cold stamped steel parts.
It employs more than 1,000 employees, including about 300 engineers and skilled tool makers, across eight plants in Ontario, Alabama and Kentucky.
The purchase of Precision Partners advances AK Steel’s focus on the automotive lightweighting industry, its position in advanced high strength steels, and further strengthens close collaboration with automotive market customers, according to AK Steel officials.
The deal also leverages AK Steel’s research and innovation in materials and metals-forming and Precision Partners’ technology and advanced capabilities in tooling and stamping, the company said.
Roger Newport, AK Steel’s chief executive officer of AK Steel, said the acquisition of Precision Partners underscores AK Steel’s commitment to expand its portfolio of high-value products and processes.
“Precision Partners has a highly experienced leadership team and is an innovator in the markets they serve,” Newport said. “This acquisition will combine the best of both companies, bringing AK Steel’s innovation in materials and manufacturing together with Precision Partners’ tooling and stamping knowledge and technology, to create a differentiated, innovative leader in the steel industry.”
Fortune 500 company AK Steel Holding Corp. is headquartered in West Chester Twp. Between operations in West Chester Twp. and its Middletown Works steel plant, AK Steel employs approximately 2,400 full-time workers in Butler County, making it the county’s third-largest employer.
AK Steel facilities in Ohio, Kentucky, Indiana, Pennsylvania, Michigan and Minnesota employ more than 8,000 altogether and produce flat-rolled carbon, electrical and stainless steels used by the automotive, appliance, construction and manufacturing markets.
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AK Steel said the move leverages its research and innovation in materials and metals-forming and Precision Partners’ technology and advanced capabilities in tooling and stamping.
Precision Partners has “a proven, experienced leadership team with a track record of delivering strong business results and growth,” according to AK Steel.
The company intends to finance the acquisition with a combination of debt and equity securities and remains committed to prudently managing its balance sheet.
The transaction is subject to customary closing and regulatory approvals in the United States and Canada. Subject to the conclusion of the regulatory review, the closing is expected to occur during the third quarter of 2017.
AK Steel spent most of 2016 strengthening its balance sheet, delivering “a solid financial performance that was a dramatic improvement over 2015,” said spokeswoman Lisa Jester.
The company raised $600 million from the sale of stock and used those proceeds to pay down debt, Jester said. Additionally, AK Steel refinanced certain debt so that it has no meaningful maturities until 2021, and ended the first quarter 2017 with $1.5 billion in liquidity.
Jester said she could not comment further on the agreement or its terms.
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BY THE NUMBERS
$360 million: price AK Steel agreed to pay for Precision Partners Holding Company
36 percent: amount AK Steel shares were down in 2017 prior to Monday’s announcement
8,000: people employed in AK Steel facilities in Ohio, Kentucky, Indiana, Pennsylvania, Michigan and Minnesota
2,400: people employed by AK Steel in Butler County
1,000: people employed by Precision Partners across eight plants in Ontario, Alabama and Kentucky
300: amount of those employees who are engineers and skilled tool makers at Precision Partners