A subsidiary of Chinese auto parts firm Sichuan Bohong Industry Co. Ltd. is acquiring Wescast Industries Inc. for $195 million.
June 1, 2012
BRANTFORD, Ont.: A subsidiary of Chinese auto parts firm Sichuan Bohong Industry Co. Ltd. is acquiring Wescast Industries Inc. for $195 million.
Bohong had been negotiating to buy the financially troubled Brantford, Ont. manufacturer of cast iron exhaust manifolds last year but failed to put up a required $2 million deposit at the time.
The company is being sold to Bohong’s Taixing International Investment Ltd. subsidiary and this time the deposit has been paid.
Wescast said in a release Bohong requires debt financing from the China Development Bank to complete the transaction, but if it fails to do so by August 31, it can extend the deadline with another $2 million deposit.
“This is a positive development for Wescast,” said Ed Frackowiak, the company’s chairman and CEO. “Wescast and Bohong continued to pursue this transaction due to the synergies between the two companies. On my most recent visit to Chengdu, China, and my meetings with Bohong representatives, it was apparent that this transaction is of strategic importance to Bohong. We continue to believe that this acquisition will accelerate some of the exciting new technology initiatives underway at Wescast.”
The Bohong Group, established in 1999, is involved in automotive sales, spare parts, service, and manufacturing, plus other interests, with more than 40 wholly owned or holding subsidiaries. Its Sichuan Haosheng Automobile Parts Manufacturing Co. Ltd. facilities are the core of the company’s auto parts casting and machining production.
Wescast reported a $4.6 million loss for the year ended Jan. 1, $1.6 million of it expenses related to a strategic review. Revenue increased to $277.3 million from $262.2 million.