(Cummings) Shares of Meritor Inc. rose more than 45% on Tuesday after it agreed to be acquired by Cummins Inc. in a deal of total transaction value of $3.7 billion.
The terms state that Cummins will part with $36.50 in cash per share of Meritor, representing about 48% premium on the company’s closing price on February 18, 2022.
Cummins expects the acquisition to strengthen its industry-leading powertrain components and developments of electrified power solutions.
Cummins CEO Tom Linebarger has lauded the deal as a significant source of synergies for the company. He expects the deal to strengthen Meritor’s core axle and brake businesses.
The deal is expected to be immediately accretive to the adjusted earnings per share of Cummins, with projections of annual pre-tax run-rate synergies of about $130 million within three years.
Cummins expects to finance the deal with cash and debt, while keeping its strong credit ratings in check.
MTOR: NYSE is up +45.98%, CMI: NYSE is up +0.49%.
