AFS Corporate Member American Axle & Manufacturing Holdings (Detroit) announced it has entered into a definitive agreement to sell Grede, its U.S. iron casting operations, to funds managed by Gamut Capital Management for $245 million.

The sale is the latest change for Grede, which was acquired by AAM in 2017 when it purchased Metaldyne Performance Group for $3.3 billion.

Across 10 manufacturing facilities, Grede develops, manufactures, assembles and supplies ductile, gray, and specialty iron castings and machined components for automotive, commercial vehicle and industrial markets. In 2018, Grede generated $781 million in sales.

“The sale of Grede will enable us to streamline our business, accelerate our debt reduction initiatives and enhance our margin profile,” AAM chairman and CEO David C. Dauch said.  “We will continue to optimize and invest in our highly-engineered product portfolio, focus on profitable growth opportunities including electrification, and further strengthen AAM’s value proposition to all key stakeholders.”

AAM will retain its El Carmen, Mexico, iron casting operations.  In a release, AAM said “the El Carmen manufacturing facility will continue to provide significant vertical integration benefits to AAM, while also continuing to serve external customers in Mexico and other global markets.”

The $245 million sale price will consist of $185 million in cash and a $60 million deferred payment obligation. The transaction is expected to close in the fourth quarter of 2019.

“Grede is a market-leading supplier of high-performance, mission-critical castings with national scale, a blue-chip customer base and significant opportunities for growth,” said Jordan Zaken, founding partner, Gamut. “We are excited to partner with Grede and its dedicated employee base in its next chapter as an independent company focused on operational excellence and best-in-class delivery for its customers.”