Cummins completes Meritor acquisition
Cummins Inc., a global power and technology leader based in Columbus, Indiana, U.S.A., has completed its acquisition of Meritor, Inc., a leading global supplier of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets based in Troy, Michigan, U.S.A. The integration of Meritor will position Cummins as a leading provider of integrated powertrain solutions across internal combustion and electric power applications.
Cummins financed the acquisition, which had a total transaction value of approximately USD3.7 billion, including assumed debt and net of acquired cash, using a combination of cash on the Cummins balance sheet, commercial paper and debt.
Morgan Stanley & Co. LLC served as financial advisor to Cummins and Mayer Brown served as legal advisor. J.P. Morgan Securities LLC served as financial advisor to Meritor and Wachtell, Lipton, Rosen & Katz served as legal advisor.
Cummins intends to deliver market-leading decarbonized solutions to global customers by accelerating Meritor’s investment in electrification and integrating development within its New Power business. ePowertrains will be a critical integration point within hybrid and electric drivetrains creating packaging and performance differentiation and the opportunity to provide advanced clean mobility products.
The acquisition of Meritor also adds products to Cummins’ components business that present attractive growth opportunities across the company’s range of power solutions and applications. Cummins expects to utilize its global footprint to accelerate the growth of these core axle and brake businesses by serving commercial truck, trailer, off-highway, defense, specialty and aftermarket customers around the world.
“We are excited to welcome Meritor’s employees into Cummins,” said Jennifer Rumsey, Cummins’ president and chief executive officer. “Together, Cummins and Meritor will move further and faster in developing economically viable decarbonized powertrain solutions that are better for people and our planet.”
“Cummins can help grow Meritor’s core business given our sales and service network and customer relationships around the world, and this acquisition has clear synergies for both companies that will position us for future investments during our industry’s technology transition. We are relentless in our focus on Destination Zero, our company strategy to achieve net-zero emissions, and will lead in the transition to decarbonized power. This acquisition is an important step in executing on our strategy,” said Tom Linebarger, Cummins’ executive chairman.
The acquisition of Meritor is expected to be immediately accretive to Cummins’ adjusted earnings per share (EPS) and generate annual pre-tax run-rate synergies of approximately USD130 million by year three after closing.