American Axle Buys Metaldyne

American Axle & Manufacturing Holdings Inc. has agreed to acquire Southfield, Mich.-based Metaldyne Performance Group Inc. for $1.6 billion in cash and stock. AAM also will assume $1.7 billion in net debt.

AAM, which is headquartered in Detroit, is a supplier of drivelines for cars, trucks and SUVs. MPG makes highly engineered components for powertrains and suspensions.

The merger has been approved by both boards. The scheme will give AAM shareholders ownership of 70% of the expanded company, with current MPG shareholders holding the remaining 30%.

The companies expect to finalize the deal in the first quarter of 2017. AAM estimates that combining the companies will create an entity with the ability to generate nearly $7 billion in sales and more than $1.2 billion in earnings before interest, taxes, depreciation and amortization. AAM predicts the merger will generate annual cost savings of $100 million-$120 million by 2018.