Mitsubishi Electric Power Products Inc. has sold its Tennessee high voltage transformer manufacturing plant to South Korea-based Hyosung Heavy Industries for $46.5 million.
Hyosung plans to convert the Memphis facility to make core-type high voltage transformers which can be used in a variety of industries. Core-type transformers account for 95 percent of the global transformer market, according to the release.
The acquisition of the MEPPI Memphis plant will assist Hyosung in meeting the growing demand for core-type transformers, with continued increase in power consumption, expansion in renewable energy industry and growing demand for replacement of power devices due to deterioration of existing power infrastructure.
“Now we are ready to provide products to customers in the United States in time through our local manufacturing facilities,” Cho Hyun-joon, chairman of Hyosung Group, said in a statement. “And we will strengthen our position as a total energy solution provider by providing circuit breakers, ESSs and STATCOMs, in addition to high voltage transformers.”
In addition, Hyosung Heavy Industries is acquiring the plant to establish a presence in the United States and to avoid high costs associated with tariffs, according to the release.
Mitsubishi Electric Power Products is no longer manufacturing large power transformers in the U.S., but will continued to supply them into North America from its Japanese factory.
“When searching for a potential buyer for the Memphis factory, we engaged in a thorough process, considering many options,” MEPPI CEO Brian Heery said. “Our goal was to find a buyer who could better utilize our modern facility, offer continued employment to our employees and contribute to the Memphis community.”
HHI is known for the HICO brand in the U.S. When the plant in Tennessee operates in full scale, Hyosung will reinforce the role of its plant in Changwon, the main manufacturing facility in Korea, as the global technology development center, while focusing on manufacturing products for premium markets including Europe and those for the Middle East and Asian markets.
The agreement is expected to close in the first quarter of 2020, subject to review and approval.