Power generation company Cummins announced that it will be acquiring Meritor, a global maker of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets.
Under the terms of the agreement, Cummins will pay $36.50 in cash per Meritor share, for a total transaction value of approximately $3.7 billion, including assumed debt and net of acquired cash.
“The acquisition of Meritor is an important milestone for Cummins. Meritor is an industry leader, and the addition of their complementary strengths will help us address one of the most critical technology challenges of our age: developing economically viable zero carbon solutions for commercial and industrial applications,” said Tom Linebarger, chairman and CEO of Cummins. “Climate change is the existential crisis of our time, and this acquisition accelerates our ability to address it. Our customers need economically viable decarbonized solutions.
“In addition, our communities and our planet depend on companies like Cummins to invest in and develop these solutions. This acquisition adds products to our components business that are independent of powertrain technology, and by leveraging our global footprint we expect to accelerate the growth in Meritor’s core axle and brake businesses. There is also a compelling financial case for this acquisition, with significant synergies expected in SG&A, supply chain operations and facilities optimization.”
Added Chris Villavarayan, CEO and president of Meritor, “This agreement with Cummins builds on Meritor’s track-record of outstanding performance and service to our customers. Our offerings will continue to play an important, strategic role as commercial vehicles transform to become electric and autonomous.”
He added that when the deal officially closes, shareholders will receive a payment valued at 48 percent above what Meritor’s closing price was on Feb. 18. Also, Meritor’s customers will benefit from the enhanced capabilities of technology that Cummins brings, including the ability to accelerate investment in axle and brake development and EV adoption.
According to Cummins, Meritor is an industry leader in axle and brake technology and Cummins believes axles will be a critical integration point within hybrid and electric drivetrains. By accelerating Meritor’s investment in electrification and integrating development within its New Power business, Cummins expects to deliver market-leading solutions to global customers.
Meritor’s legacy dates back more than 110 years.
