Cummins Agrees To Acquire Meritor For $3.7B

  • Cummins Inc CMI has agreed to acquire electric powertrain solutions provider Meritor Inc MTOR for about $3.7 billion, including assumed debt and net of acquired cash.
  • The company will pay Meritor shareholders $36.50 in cash per share, representing a 48% premium to the Meritor's closing price of $24.67 on February 18, 2022.
  • Meritor, headquartered in Troy, Michigan, has more than 9,600 employees serving commercial truck, trailer, off-highway, defense, specialty, and aftermarket customers worldwide.
  • Cummins expects the transaction to be immediately accretive to its adjusted EPS and generate annual pre-tax run-rate synergies of about $130 million by year three after closing.
  • "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.
  • The transaction is expected to close by the end of 2022.
  • Cummins intends to finance the transaction using a combination of cash on its balance sheet and debt. It held $3.2 billion in cash and equivalents as of December 31, 2021.
  • Price Action: CMI shares are trading lower by 0.28% at $217.45, and MTOR higher by 44.2% at $35.57 in premarket on the last check Tuesday.
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