Hitachi Metals Said to Mull $1 Billion Waupaca Foundry Sale

(Bloomberg) -- Hitachi Metals Ltd., the specialty steel producer mostly owned by Japanese conglomerate Hitachi Ltd., is exploring a sale of U.S.-based unit Waupaca Foundry Inc., people familiar with the matter said.

Hitachi Metals is talking to advisers about a potential divestment of the Wisconsin-based foundry unit, which could fetch about $1 billion, said the people, who asked not to be identified because the matter is private.

The Japanese steelmaker bought Waupaca in 2014 for about $1.3 billion in cash from KPS Capital Partners LP, which had acquired the business two years earlier from Thyssenkrupp AG.

Deliberations are at an early stage and may not lead to a transaction, the people said. The timing of a sale could be impacted by the coronavirus, which is hampering travel, business meetings and investor confidence.

A spokesperson for Hitachi Metals declined to comment. Representatives for Waupaca couldn’t be reached for comment.

Net income has fallen at Hitachi Metals in the last four financial years, and the company said Jan. 30 that it expects a loss of 47 billion yen ($436 million) in the twelve months through March 2020. Hitachi Ltd. owns about 53% of Hitachi Metals, according to data compiled by Bloomberg.

Hitachi Metals’s foundry business has struggled, swinging to an operating loss in the latest financial year. Shares of Hitachi Metals have fallen 5.3% in Japanese trading this year, valuing the company at about $6.1 billion.

Waupaca has about 4,500 employees and is one of the world’s largest iron foundries, making castings for the automotive, construction and oil and gas industries. It has operations in Pennsylvania, Wisconsin, Tennessee and Indiana, according to the company’s website.

--With assistance from Masumi Suga.

To contact the reporters on this story: David Welch in Southfield at dwelch12@bloomberg.net;Manuel Baigorri in Hong Kong at mbaigorri@bloomberg.net

To contact the editors responsible for this story: Fion Li at fli59@bloomberg.net, ;Craig Trudell at ctrudell1@bloomberg.net, Michael Hytha

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