Cummins Inc. expects to finalize this week a $3.7 billion deal to acquire an automotive parts supplier that used to be a major employer in Columbus after receiving regulatory approval and the green light from shareholders.
Cummins said Tuesday that it expects to close on an agreement to acquire Michigan-based Meritor Inc. for $36.50 in cash per share, a 48% premium on Meritor’s closing price on Feb. 18. The deal is being bankrolled through a combination of cash and debt.
Meritor shareholders overwhelmingly voted in favor of Cummins’ acquisition bid in May, according to filings with the U.S. Securities and Exchange Commission.
“The companies are working together to complete the acquisition this week, as we have received all regulatory approval to close the transaction,” Cummins President and CEO Jennifer Rumsey told financial analysts during the company’s earnings conference call on Tuesday.
Cummins officials have said that they believe the acquisition will accelerate Cummins’ efforts in technologies that curb emissions from commercial vehicles and industrial applications.
Meritor is no stranger to Columbus, operating under the name ArvinMeritor Inc. from 2000 to 2011. ArvinMeritor formed on July 7, 2000 after the merger of Meritor Automotive Inc. and Columbus-based Arvin Industries Inc., a former Fortune 500 company that at one point employed an estimated 3,000 people here and 850 in Franklin.
ArvinMeritor changed its name to Meritor Inc. in 2011 after shedding many of its former Arvin properties in southern Indiana and elsewhere.
Meritor reported $3.8 billion in sales in fiscal year 2021, which ended on Oct. 3, according to filings with the U.S. Securities and Exchange Commission. By comparison, Cummins reported $24 billion in sales during calendar year 2021.
“The strong support our shareholders have expressed for this transaction reflects the compelling value and important opportunity to shape the future of powertrain components and accelerate the development of electrified power solutions for commercial vehicles,” Meritor CEO and President Chris Villavarayan in a statement following the shareholders’ vote in May.
In February, Cummins said the acquisition is an “important milestone” as the company seeks to develop what it has characterized as “one of the most critical technology challenges of our age” — economically viable technologies that can reduce carbon emissions from commercial vehicles and industrial applications.
“Climate change is the existential crisis of our time,” Cummins Chairman Tom Linebarger said earlier this year. “…The acquisition of Meritor is a unique opportunity to build out our capabilities in the transition and to provide alternative propulsion in a scalable and financially disciplined manner.”