Detroit-based American Axle & Manufacturing Holdings, Inc. has agreed to sell its Grede iron casting operations in the U.S. to funds managed by Gamut Capital Management for $245 million.

Grede develops, manufactures, assembles and supplies ductile, gray and specialty iron castings and machined components for automotive, commercial vehicle and industrial markets from 10 manufacturing facilities. In 2018, it generated $781 million in sales, including $40 million in intercompany transactions.

“The sale of Grede will enable us to streamline our business, accelerate our debt reduction initiatives and enhance our margin profile,” AAM CEO David C. Dauch said in a statement.  “We will continue to optimize and invest in our highly-engineered product portfolio, focus on profitable growth opportunities including electrification, and further strengthen AAM’s value proposition to all key stakeholders.”

“We are excited to partner with Grede and its dedicated employee base in its next chapter as an independent company focused on operational excellence and best-in-class delivery for its customers,” said Jordan Zaken, founding Partner of Gamut.

AAM will retain its El Carmen, Mexico, iron casting operations.

The $245 million sale price consists of $185 million in cash and a $60 million deferred payment, subject to certain customary adjustments.  Net cash proceeds will primarily be used to repay outstanding indebtedness.  The transaction is expected to close in the fourth quarter of 2019, subject to customary closing conditions, including the receipt of regulatory approvals.