ATLANTA, GA – Accuride expects its deal to acquire German-based Mefro Wheels will close in the fourth quarter of this year, but the maker of wheels and wheel end components is already eyeing further growth around the globe.
“We’re not done,” said Rick Dauch, president and Chief Executive Officer, in a briefing during the North American Commercial Vehicle Show. “We want to be a true global wheel end manufacturer.”
The Mefro deal, announced in June and currently awaiting European anti-trust rulings, is only the latest example of a company being drawn into Accuride’s expansion plans. This May, Accuride acquired KIC, a U.S.-based wheel and wheel end supplier that uses contract manufacturers. A majority stake in Gianetti Ruote, a supplier of steel wheels based in Milan, Italy, came in November 2015.
Accuride’s annual revenues would effectively double once the Mefro deal closes. The latter company is already the top supplier of steel wheels in Europe.
Crestview Partners, the private equity firm that acquired Accuride in 2016, has US $3.2 billion in funding, and can invest 10% of that into any one company, Dauch observed. There’s also the option of approaching limited partners to invest twice that amount.
For now, Accuride has US $70 million at its disposal. And since going private last November, the company has reduced its debt load by $85 million, Dauch says.
Solingen, Germany-based Mefro has eight manufacturing operations in Germany, France, Turkey, China and Russia.
Mefro Wheels has an “upside down” balance sheet but is a capable manufacturer, Dauch said, referring to challenges like high inventory levels. Accuride traditionally keeps 20 days of products on hand, while Mefro has inventory that would cover 60-70 days. “That’s a lot of cash tied up,” he said.
There may be opportunities to rationalize Mefro manufacturing activities as well. “They have too much capacity. They have too much footprint … There’s probably one to two too many operations over there,” he added.
The clearly confident Dauch believes everything is on track. “We’ve done that before and we know how to do it,” he said.
Accuride has undeniably turned around its own fortunes. It emerged from Chapter 11 bankruptcy in early 2010, and lost market share from 2010-14.
Once the company has a chance to “digest” its KIC acquisition, integrating that with its Gunite business, the focus turns to other markets, Dauch said. Accuride does not yet make products in the growing truck markets of China or India, for example.
Accuride is currently the top producer of steel wheels and sits second to Alcoa when it comes to producing aluminum wheels.