Cummins Inc. is buying Meritor Inc. in a cash deal valued at approximately $3.7 billion, including assumed debt and net of acquired cash, bringing drivetrain, mobility, braking, and electric powertrain technologies for commercial and industrial vehicles into its portfolio.
Meritor directors have approved the combination, and Cummins expects the deal to closed by the end of 2022, pending customer closing conditions, shareholder approval, and applicable regulatory clearance.
Cummins projects the addition of Meritor will generate synergies of approximately $130 million annually by year three after closing. It will finance the transaction with cash and debt.
Strategically, Meritor’s axle and brake technologies are seen positioning Cummins to provide integrated powertrain solutions for combustion and electric power applications. The buyer also stated it expects eAxles to be a critical integration point within hybrid and electric drivetrains.
Cummins – which develops diesel, natural gas, hybrid, and electric powertrains – characterized the combination with Meritor as helping to develop “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,” according to Cummins chairman and CEO Tom Linebarger.
Meritor currently reports 9,600 employees at manufacturing plants, engineering centers, joint ventures, and distribution centers in 19 countries.
Cummins has approximately 59,000 employees. It’s not known how much overlap may exist between the two organizations.
The takeover follows a busy month for Cummins, which executed an agreement to work with Isuzu Motors Ltd. to develop a prototype medium-duty, battery electric truck; acquired Westport Fuel Systems’ share of the Cummins Westport Inc., which produces natural-gas engines for commercial vehicles, tractors, and buses; and purchased Jacobs Vehicle Systems, a manufacturer of diesel engine-braking, cylinder deactivation, start-and-stop, and thermal-management devices for commercial vehicles.