Tupy to Buy Cifunsa, Technocast

Brazilian foundry makes $439-million deal to expand in NAFTA region

Brazilian metalcaster Tupy S.A. has agreed to buy two Mexican foundries controlled by Grupo Industrial Saltillo, according to its statement. Cifunsa Diesel, in Saltillo, and Technocast, in Ramos Arizpe, produce cast iron engine blocks and cylinder heads for automotive and commercial truck markets, agricultural and construction machinery, marine engines, and other industrial engines.Further reports indicate that Saltillo will retain a variety of the two foundries’ automotive production lines, such as crankshafts, brackets, and differential cases; only the blocks and heads production will be sold to Tupy.

Tupy stated the deal is worth $439 million, and must be approved by various regulatory agencies. Grupo Saltillo said the businesses are being sold as part of a plan to reorganize its holdings and reduce debt, and to seek business expansion opportunities.

Grupo Saltillo president and CEO Alfonso Gonzalez Migoya called Tupy “a buyer with recognized expertise, which will undoubtedly expand the business and promote the development of both units."

Caterpillar Inc. is a 33% stakeholder in one of the foundries, Technocast, and Tupy detailed that the new capacity will help it to increase the volume of castings it supplies for agricultural, construction, and mining machinery.

Both Mexican plants also produce a range of products similar to Tupy’s own output, for a similar range of customers. Tupy indicated the purchase would strengthen its market presence in the NAFTA region and increase the volume of its supplies to customers in North America. "We are greatly interested in expanding our service to these segments and thus diversifying our portfolio," stated Tupy CEO Luiz Tarquinio Sardinha Ferro.

"Internationalization will allow us to diversify the company's business and strengthen our global presence," Ferro explained, though he emphasized that Brazil will remain the primary focus of its corporate strategy. "The size of our investment in casting, milling and environmental advances in the last three years in Joinville and Maua plants adds up to R$500 million ($283 million). This should cast no doubt on our commitment to Brazil."

Tupy is the largest metalcasting firm in Latin America, with two foundries in southern Brazil, at Joinville and Mau that have a combined capacity listed at 500,000 metric tons/year. In addition to engine blocks and heads it produces brake, transmission, steering, axle and suspension parts for trucks and off-road equipment, and numerous other castings for energy, construction, and other end markets.

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