Meritor, Inc. has entered into an agreement with an affiliate of The Carlyle Group, a global investment firm, under which Meritor will acquire AxleTech for approximately $175 million in cash, adjusted for changes in working capital at closing and subject to regulatory approvals and customary closing conditions.
The transaction advances Meritor’s M2022 objectives to accelerate global sales and growth by leveraging the company’s core competencies to grow strategically in adjacent markets. The addition of AxleTech enhances Meritor’s growth platform, bringing a highly complementary global product portfolio across the off-highway, defense, specialty, and aftermarket segments, according to the company.
AxleTech’s offerings include a full product line of independent suspensions, axles, braking solutions, and drivetrain components. These capabilities will enable Meritor to offer global customers a wider array of differentiated products and solutions while further diversifying the company’s portfolio.
Headquartered in Troy, Mich., AxleTech is a privately-held leading technology company that designs, engineers, manufactures, sells, and services drivetrain systems and components, with a focus on off-highway applications. AxleTech generated $248 million in revenue in calendar-year 2018.
“We are delighted to welcome AxleTech back to the Meritor family. The addition of AxleTech is a compelling value-creating opportunity to broaden our position in attractive, adjacent markets and advances our M2022 strategy," said Jay Craig, Meritor’s CEO and president. “Meritor’s technical expertise, operational excellence and proven track record will be a powerful platform to accelerate growth. Our product portfolios are highly complementary and we share a commitment to our people and customers. We look forward to realizing the full benefits of the transaction by serving as a premier supplier to our global customers and enhancing shareholder value.”
Meritor expects to realize more than $15 million in annual cost synergies by fiscal year 2022, through operating, productivity, and manufacturing efficiencies. The combination of AxleTech’s offerings with Meritor’s on-highway leadership will position the company to accelerate growth and deliver an enhanced value proposition to new and existing global customers.
Upon completion of the transaction, AxleTech will operate within Meritor’s Aftermarket, Industrial, and Trailer segment. The transaction is currently expected to close in the fourth fiscal quarter, subject to regulatory approvals and customary closing conditions.