Powertrain leaders Cummins and Meritor have announced that they have entered into a definitive agreement under which Cummins will acquire Meritor.
Under the terms of the agreement, Cummins will pay $USD36.50 in cash per Meritor share, for a total transaction value of approximately $USD3.7 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, Cummins.
“Climate change is the existential crisis of our time and this acquisition accelerates our ability to address it. Our customers need economically viable decarbonised solutions,” he said.
“In addition, our communities and our planet depend on companies like Cummins to invest in and develop these solutions,” Linebarger added.
The acquisition adds products to Cummins’ components business that are independent of powertrain technology and follows its acquisition earlier this month of Jacobs Vehicle Systems.
By leveraging its global footprint Cummins expects to accelerate the growth in Meritor’s core axle and brake businesses.
There is also a compelling financial case for the acquisition, with significant synergies anticipated in SG&A, supply chain operations and facilities optimisation.
The agreement with Cummins will build on Meritor’s track-record of outstanding performance and service to its customers according to Chris Villavarayan, CEO and President of Meritor.
“Our offerings will continue to play an important, strategic role as commercial vehicles transform to become electric and autonomous,” he said.
“At closing, Meritor shareholders will receive immediate value at a compelling 48 per cent premium to the Meritor trading price as of Feb. 18, 2022, and customers will benefit from enhanced capabilities in technology and the ability to accelerate investment in axle and brake development and EV adoption,” said Villavarayan.
“Our global team members and their commitment to excellence helped make this transaction possible and will fuel our innovations as we embark on this next chapter in our longstanding legacy.”
The Board of Directors of Meritor has unanimously approved the agreement with Cummins and recommends that Meritor shareholders vote in favor of the transaction at the Special Meeting of Shareholders to be called in connection with the transaction.
The transaction, which is subject to customary closing conditions and receipt of applicable regulatory approvals and Meritor shareholder approval, is expected to close by the end of the calendar year.
In other news, Senator Tony Sheldon is expected to address delegates at the upcoming Victorian Transport Association (VTA) State Conference.