Meritor agrees to buyout bid at a 48% premium, that implies a $2.6 billion market cap

Commercial truck and industrial equipment maker Meritor Inc. announced an agreement to be acquired by Cummins Inc. in a cash deal valued $3.7 billion, including debt and acquired cash. Under terms of the deal, Cummins will pay $36.50 for each Meritor share outstanding, which represents a 48% premium to Friday’s stock closing price of $24.67, and the highest price the stock traded at since May 1998. Meritor’s stock is currently halted for news, while Cummins stock fell 2.1% in premarket trading. The buyout bid price implies a market capitalization for Meritor of $2.58 billion. “The integration of Meritor’s people, technology and capabilities will position Cummins as one of the few companies able to provide integrated powertrain solutions across combustion and electric power applications,” the companies said in a statement. “This is the right time to pursue this combination as demand for decarbonized solutions accelerates.” Shares of Meritor have dropped 14.7% over the past three months and Cummins stock has lost 4.4%, while the S&P 500 has declined 7.1%.

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