Meritor to acquire AxleTech for $175 million
AxleTech enhances Meritor’s growth platform, bringing a complementary global product portfolio across the off-highway, defense, specialty and aftermarket segments
Meritor, the US-based supplier of drivetrain, mobility, braking and aftermarket solutions for commercial vehicle and industrial markets, has entered into an agreement with an affiliate of The Carlyle Group, a global investment firm, under which Meritor will acquire technology company AxleTech for approximately $175 million in cash, adjusted for changes in working capital at closing and subject to regulatory approvals and customary closing conditions.
Headquartered in Michigan, AxleTech 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.
Meritor intends to finance the transaction with a combination of cash on hand and debt. Meritor does not expect the transaction to materially change the company’s net debt to adjusted EBITDA ratio for fiscal year 2019. 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.
Meritor and AxleTech have complementary customer bases that will further diversify the company’s exposure in adjacent end-markets and enhance its ability to drive growth. Meritor expects to realize more than $15 million in annual cost synergies by fiscal year 2022, through operating, productivity and manufacturing efficiencies.
The addition of AxleTech enhances Meritor’s growth platform, bringing a complementary global product portfolio across the off-highway, defense, specialty and aftermarket segments. 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.
Jay Craig, CEO and president, Meritor, said: “The addition of AxleTech is a compelling value-creating opportunity to broaden our position in attractive, adjacent markets and advances our M2022 strategy. 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.”
Bill Gryzenia, CEO, AxleTech, said: "This marks an exciting chapter for AxleTech and reflects the collective efforts of our entire team. We believe that Meritor’s deep understanding of the business and best-in-class capabilities are a natural fit to support AxleTech’s next growth phase.”