Global powertrain and power leader Cummins and the leading supplier of drivetrain, mobility, braking, aftermarket and electric powertrain solutions, Meritor on Tuesday announced that they have entered into a definitive agreement under which Cummins will acquire Meritor.
Under the agreement terms, 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.
Morgan Stanley & Co LLC serves as a financial advisor to Cummins, and Mayer Brown serves as a legal advisor. J P Morgan Securities LLC is serving as financial advisor to Meritor and Wachtell, Lipton, Rosen & Katz is serving as legal advisor.
The Board of Directors of Meritor has unanimously approved the agreement with Cummins and recommends that Meritor shareholders vote in favour of the transaction at the Special Meeting of Shareholders to be called in connection with the transaction. The transaction, 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.
Tom Linebarger, Chairman and CEO, Cummins, said, “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. 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,” Linebarger added.
Chris Villavarayan, CEO and President of Meritor, said, “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. 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.”