Cummins acquiring Meritor
Cummins is acquiring Meritor in a deal that will give the company a broad reach in traditional power-trains and components as well as accelerating its development of battery-electric and fuel-cell-electric propulsion systems, Cummins said.
The $3.7 billion deal was announced Feb. 22. Cummins officials said the acquisition will position the company as one of the few able to provide integrated power-train solutions across both internal-combustion and electric power applications.
Citing the two company’s “complementary strengths,” Tom Linebarger, Cummins chairman and chief executive, said in a news release the deal “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,” he said.
By accelerating Meritor’s investment in electrification and integrating development “within Cummins’ New Power business,’’ Linebarger said, “we think we can be at the table for virtually every negotiation for who can supply what in the commercial/industrial sector. We want to be able to provide both systems and components” in the fast-moving electrification sector.
The deal also will “provide customers with more certainty they’ll have a viable product for years and years to come,” he added.
Meritor has transitioned from a traditional drive-train manufacturing company into an electric drive-train company, ‘’and this is the next transition in our journey,” said Chris Villavarayan, president of Meritor.
Meritor’s traditional axle and brake business fits well into Cummins’ component business, Linebarger said, and it can grow that business on a global scale.
“Cummins is in some places Meritor isn’t, in bigger ways.’’
While Cummins will be investing in growing the electrification, at the same time, the companies have identified cost synergies, and by the end of the third year predict positive pre-tax synergies of $130 million, according to the companies. The transaction, which is subject to customary closing conditions, regulatory approvals, and shareholder approval, is expected to close by the end of the year.