Mitsubishi Heavy Industries to Acquire Federal Broach Holdings

Will Boost Presence in Global Cutting Tool Market

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Mitsubishi Heavy Industries America, Inc.

May 21, 2012, 01:30 ET

NEW YORK, May 21, 2012 /PRNewswire/ -- Mitsubishi Heavy Industries, Ltd. (MHI) has signed an agreement with Federal Broach Holdings, LLC and its shareholders to acquire all of the equity interest of Federal Broach, one of the world's leading manufacturers of broaches and broach machines. Broaches are bar-shaped cutting tools that, when attached to broaching machines, are used to remove material from workpieces to form complex holes and finish surfaces with a high degree of accuracy.

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Federal Broach has an extensive customer base in North America and Europe, providing tooling and equipment to both the automotive and aircraft industries. By consolidating its operations with those of Federal Broach, MHI will strengthen its cutting tool operations, extend its global reach, and gain a leading share of the world market.

Products manufactured by Federal Broach include helical broaches, used for machining the helical gears found in motor vehicle automatic transmissions, and "pine tree" type broaches, which are mainly used in machining parts for aircraft engines and power generation systems. These "pine tree" type broaches are used for machining grooves that mate blades and turbine discs in the fabrication of jet engines and various turbines.

Demand for these products, which Federal Broach supplies to some of the world's leading manufacturers, is expected to grow. About 80% of the company's sales are in North America and Europe, while more than 95% of MHI's broach sales are in Asia. As the markets and products of the two companies are highly complementary, significant synergies are expected from the integration of their operations.

Federal Broach is headquartered in Harrison, Michigan, where they manufacture Federal Broach branded and Detroit Broach branded cutting tools and machines. In addition to the Harrison, Michigan manufacturing facility, Federal operates plants in Greer, South Carolina, and Plantation, Florida for the production of Southeast Broach branded "pine tree" type broaches. The company also has holdings in a cutting tool service facility for broach re-sharpening in Queretaro, Mexico.

After the acquisition, MHI plans to expand Federal Broach's production capacity in order to aggressively market broaches and broach machines in the Asian market. At the same time, MHI will further enhance marketing of its own gear cutting machines and tools in North America and Europe through Federal Broach. Through these initiatives, MHI can shorten delivery times and provide customers with more detailed technical services.

Plans call for MHI to transfer Federal Broach technology to Mitsubishi Heavy Industries India Precision Tools, Ltd. (MHI-IPT), a MHI cutting tool manufacturing and marketing base in Ranipet, India. This will create three bases—in Japan, the U.S. and India—from which business can be further expanded globally.

About Mitsubishi Heavy Industries America, Inc.

MHIA is a wholly owned subsidiary of Mitsubishi Heavy Industries, Ltd. (Japan) MHIA's divisions include Transportation Systems, Tire Machinery, Aircraft Product Support, Corrugating and Printing Machinery, Machine Tools, Environmental Systems and Injection Molding Machinery. MHIA affiliates include Mitsubishi Engine North America, Inc. (Engines and Turbo-chargers), Mitsubishi Power Systems America, Inc., (Power Systems), Intercontinental Jet Service Corp. (Sales, Repair and Maintenance of MU-2 and MU-300 Aircraft) and Crystal Mover Services, Inc. (Operation and Maintenance of Automated People Movers).