Cummins completes acquisition of Meritor, to deliver decarbonized solutions, Auto News, ET Auto
New Delhi:Global power and technology leader, Cummins Inc. recently completed the acquisition Meritor, Inc., a leading global supplier of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets.
The integration of Meritor’s people, products and capabilities in the axle and brake technology will position Cummins as a leading provider of integrated powertrain solutions across internal combustion and electric power applications, Cummins said.
As demand for decarbonized solutions accelerates, 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 for customers. 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.
The acquisition of Meritor also adds products to Cummins’ components business that presents attractive growth opportunities across the company’s range of power solutions and applications. It also expects to utilize its global footprint to accelerate the growth of the core axle and brake businesses by serving commercial truck, trailer, off-highway, defence, specialty and aftermarket customers around the world.
“We are excited to welcome Meritor’s employees into Cummins. Together, Cummins and Meritor will move further and faster in developing economically viable decarbonized powertrain solutions that are better for people and our planet,” Jennifer Rumsey, President and Chief Executive Officer, Cummins, said.
“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 our strategy,” Tom Linebarger, Executive Chairman, Cummins, said.
As previously announced, the acquisition of Meritor is expected to be immediately accretive to Cummins’ adjusted EPS and generate annual pre-tax run-rate synergies of approximately USD 130 million by year three after closing, anticipated to be comprised of, among other things, SG&A savings, supply chain operations and facilities optimization.
Cummins financed the acquisition, which had a total transaction value of approximately USD 3.7 billion, including assumed debt and net of acquired cash, using a combination of cash on the Cummins balance sheet, commercial paper and debt. The company remains committed to maintaining its strong credit ratings.