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Meritor Announces Agreement to Sell its Interest in Meritor WABCO Joint Venture to WABCO Holdings Inc.


Transaction Allows Meritor to Allocate Capital to M2019 Strategic Priorities

TROY, Mich., Sept. 18, 2017 /PRNewswire/ -- Meritor, Inc. (NYSE: MTOR) today announced that it has signed a definitive agreement to sell its interest in the Meritor WABCO joint venture (the "JV") with WABCO Holdings Inc. (NYSE: WBC) ("WABCO") to WABCO. The total purchase price for the sale is $250 million, and Meritor will also receive a final partnership distribution immediately prior to the closing. The transaction is expected to close on Oct. 1, 2017.

Following the closing, Meritor will continue to provide sales, service and training to Meritor WABCO customers through its DriveForce team for up to two years, and call center services for customer support and the processing of warranty claims for a period of approximately one year. In addition, Meritor will remain the exclusive distributor of a certain range of WABCO's aftermarket products in the United States and Canada, and the non-exclusive distributor in Mexico, following the completion of the transaction through an aftermarket distribution agreement. The parties have agreed to options that allow either party to terminate, at certain points during the first three and a half years, these distribution arrangements at an exercise price of between $225 million and $265 million based on the earnings of the business.

Meritor intends to use the proceeds from the transaction toward its M2019 strategic priorities, which include paying down debt, funding strategic investments and repurchasing additional shares. In the near term, the company intends to pay down debt through the redemption of the remaining $175 million of outstanding 2021 notes.

"This transaction allows Meritor to allocate capital toward our strategic priorities and enhances our ability to achieve M2019 targets," said Jay Craig, CEO and president. "The decision to sell our interest in the JV enables us to focus on strategic priorities that involve growing our on- and off-highway, specialty, components and aftermarket businesses, among other things."

"Our partnership with WABCO has created significant value for our shareholders over the past 27 years, and we are grateful for the work the Meritor WABCO team has done to make this joint venture successful. We are pleased with this outcome and look forward to continuing to execute on our M2019 plan that we believe positions Meritor for future growth."

Meritor WABCO was formed in 1990 and is dedicated to the delivery of advanced safety braking technology and efficient air brake systems for commercial vehicles in North America.

About Meritor

Meritor, Inc. is a leading global supplier of drivetrain, mobility, braking and aftermarket solutions for commercial vehicle and industrial markets. With more than a 100-year legacy of providing innovative products that offer superior performance, efficiency and reliability, the company serves commercial truck, trailer, off-highway, defense, specialty and aftermarket customers around the world. Meritor is based in Troy, Mich., United States, and is made up of approximately 8,000 diverse employees who apply their knowledge and skills in manufacturing facilities, engineering centers, joint ventures, distribution centers and global offices in 18 countries. Meritor common stock is traded on the New York Stock Exchange under the ticker symbol MTOR.

Forward-Looking Statement

This Form 8-K contains statements relating to future results of the Company that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "estimate," "should," "are likely to be," "will" and similar expressions. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to reliance on major OEM customers and possible negative outcomes from contract negotiations with our major customers, including failure to negotiate acceptable terms in contract renewal negotiations and our ability to obtain new customers; the outcome of actual and potential product liability, warranty and recall claims; our ability to successfully manage rapidly changing volumes in the commercial truck markets and work with our customers to manage demand expectations in view of rapid changes in production levels; global economic and market cycles and conditions; availability and sharply rising costs of raw materials, including steel, and our ability to manage or recover such costs; our ability to manage possible adverse effects on our European operations, or financing arrangements related thereto following the United Kingdom's decision to exit the European Union or, in the event one or more other countries exit the European monetary union; risks inherent in operating abroad (including foreign currency exchange rates, restrictive government actions regarding trade, implications of foreign regulations relating to pensions and potential disruption of production and supply due to terrorist attacks or acts of aggression); risks related to our joint ventures; rising costs of pension and other postemployment benefits; the ability to achieve the expected benefits of strategic initiatives and restructuring actions; our ability to successfully consummate the sale of our interest in the Meritor WABCO JV; our ability to successfully integrate the products and technologies of FABCO Holdings, Inc. and future results of such acquisition, including its generation of revenue and it being accretive; the demand for commercial and specialty vehicles for which we supply products; whether our liquidity will be affected by declining vehicle productions in the future; OEM program delays; demand for and market acceptance of new and existing products; successful development and launch of new products; labor relations of our Company, our suppliers and customers, including potential disruptions in supply of parts to our facilities or demand for our products due to work stoppages; the financial condition of our suppliers and customers, including potential bankruptcies; possible adverse effects of any future suspension of normal trade credit terms by our suppliers; potential difficulties competing with companies that have avoided their existing contracts in bankruptcy and reorganization proceedings; potential impairment of long-lived assets, including goodwill; potential adjustment of the value of deferred tax assets; competitive product and pricing pressures; the amount of our debt; our ability to continue to comply with covenants in our financing agreements; our ability to access capital markets; credit ratings of our debt; the outcome of existing and any future legal proceedings, including any litigation with respect to environmental, asbestos-related, or other matters; whether the injunction relating to the Cole litigation will remain dissolved or will not otherwise be reinstated, whether the plaintiffs are granted a petition for certiorari with the U.S. Supreme Court and the actual impacts of the Company's plan to modify certain benefits of former union employee retirees on the Company's balance sheet, earnings and amount of cash payments; possible changes in accounting rules; ineffective internal controls; and other substantial costs, risks and uncertainties, including but not limited to those detailed herein and from time to time in other filings of the Company with the SEC. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Meritor, Inc. logo. (PRNewsFoto/Meritor, Inc.)


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