Cummins Inc. has agreed to acquire Meritor, a global supplier 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 $3.7 billion, including assumed debt and net of acquired cash.
Tom Linebarger, Cummins chairman and CEO, called the acquisition an important milestone.
“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,” Linebarger said. “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.”
Linebarger said the acquisition adds products to the Cummins components business that are independent of powertrain technology.
“(B)y leveraging our global footprint we expect to accelerate the growth in Meritor’s core axle and brake businesses,” Linebarger said. “There is also a compelling financial case for this acquisition, with significant synergies expected in selling, general and administrative expenses, supply chain operations and facilities optimization.”
Chris Villavarayan, Meritor president and CEO, said the agreement will build Meritor’s performance track record.
“Our offerings will continue to play an important, strategic role as commercial vehicles transform to become electric and autonomous,” Villavarayan said. “At closing, … customers will benefit from enhanced capabilities in technology and the ability to accelerate investment in axle and brake development and EV adoption.”
Cummins called Meritor an industry leader in axle and brake technology. Integrating Meritor’s people, technology and capabilities will position Cummins as one of the few companies able to provide integrated powertrain solutions across combustion and electric power applications, the company stated. Cummins stated it believes eAxles 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.
Morgan Stanley & Co. LLC is serving as financial advisor to Cummins and Mayer Brown is serving as legal advisor. J.P. Morgan Securities LLC is serving as financial advisor to Meritor and Wachtell, Lipton, Rosen & Katz is serving as legal advisor.
