Engine maker Cummins to acquire axle, brake company Meritor

Engine maker Cummins Inc. says it plans to buy axle and brake specialist company Meritor Inc. The acquisition is expected to augment Cummins’ offerings in hybrid-electric and plug-in vehicle technology.

Cummins announced it would pay a premium price for Meritor stock, $36.50 in cash per Meritor share. The total transaction is valued at about $3.7 billion, including assumed debt and net of acquired cash.

The price paid is 48% higher than the Meritor trading price as of Feb. 18, according to the news release.

The deal is expected to close by the end of 2022.

The integration of Meritor’s people, technology and capabilities will position the engine manufacturer to be able to provide integrated powertrain solutions across combustion and electric power applications, according to the news release.

“The acquisition of Meritor is an important milestone for Cummins. 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,” Tom Linebarger, Cummins chairman and CEO, said in a news release. “Climate change is the existential crisis of our time, and this acquisition accelerates our ability to address it. Our customers need economically viable decarbonized solutions.”

This acquisition augments Cummins’ powertrain technology, Linebarger said in the news release. He said he also expects to leverage his company’s global footprint to accelerate growth in Meritor’s core axle and brake businesses.

Meritor created its Blue Horizon brand in 2018, which includes electric, hybrid and hydrogen fuel-cell technology for trucks, vans, tractors and other commercial vehicles.

Troy, Mich.-based Meritor was founded in 1909. It was spun off from Rockwell International in 1997. In 2000 it merged with Arvin Industries and became ArvinMeritor, but in 2011 the name reverted to Meritor. The company has more than 9,600 employees. It serves commercial truck, trailer, off-highway, defense, specialty and aftermarket clients.

Meritor common stock is traded on the New York Stock Exchange under the ticker symbol MTOR.

Other moves as Cummins positions itself

Earlier in February, Cummins announced plans to acquire Jacobs Vehicle Systems, original manufacturer of the Jake Brake, which was invented by the engine manufacturer’s founder.

In January, Cummins’ announced plans to develop with Isuzu Motors a medium-duty battery-electric truck prototype ready to demonstrate this year in North America.

In November 2021, the engine maker announced plans to produce a 15-liter natural gas engine for heavy-duty trucks.

Columbus, Ind.-based Cummins Inc. is a multinational corporation that specializes in diesel and alternative fuel engines and generators, and related components and technology. Cummins sells products in about 190 countries. The company is listed under the ticker symbol CMI. LL