In an expansion of their existing business relationship, Eaton and Cummins Inc. have announced an agreement to form a joint venture for automated transmissions for heavy-duty and medium-duty commercial vehicles. The joint venture will be named Eaton Cummins Automated Transmission Technologies.
Under the terms of the agreement, Eaton will receive $600 million in cash from Cummins for 50 percent interest in the joint venture. Cummins and Eaton will each own 50% of the new joint venture, which is subject to regulatory approvals and customary closing conditions. The parties expect the transaction to close in the third quarter. Cummins will consolidate joint venture results as part of its Components business segment.
“Customers are focused on powertrain solutions that provide the best combination of technology, performance and quality,” said Craig Arnold, Eaton chairman and chief executive officer. “Our joint venture with Cummins will leverage the technical strengths and experience of two industry leaders with long histories and deep industry expertise to provide superior automated transmission technology for our global customers.”
Since 2013, Cummins and Eaton have partnered in the development of a range of SmartAdvantage powertrain systems for heavy-duty trucks. The powertrains combine Cummins diesel engines with Eaton’s transmissions.
“Our growth strategy includes expanding our product offerings and extending our global footprint by becoming the world’s leading powertrain supplier,” said Tom Linebarger, chairman and CEO, Cummins Inc. “Our JV with Eaton will deliver the most advanced automated transmissions and develop an integrated powertrain and service network that supports our customers like never before.”
The aim of the global joint venture is to provide customers with transmission technologies and solutions that deliver best-in-class fuel efficiency, performance and uptime while leveraging both Cummins’ and Eaton’s global service and support networks. The joint venture will design, assemble, sell and support all future medium-duty and heavy-duty automated transmissions for the commercial vehicle market.
Eaton’s current medium-duty automated transmission, Procision, and next generation heavy-duty automated transmissions, will be part of the joint venture. In addition, the joint venture will market, sell, and support Eaton’s current generation of automated heavy-duty transmissions to OEM customers in North America.
Eaton’s Vehicle Group will retain its global manual transmission business, global clutch business, current generation medium-duty and heavy-duty automated transmission business outside of North America, its global aftermarket business, its light-duty transmission business, its agricultural transmission business and its global automotive business and associated product lines.