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.