The consolidation in the mechanical and electrified powertrain world continues with the surprising announcement that Meritor, Inc., Troy, Mich. is buying AxleTech (also in Troy) from an affiliate of the global investment company The Carlyle Group. The deal is for approximately $175 million in cash, adjusted for changes in working capital at closing and subject to regulatory approvals and customary.
AxleTech had $248 million in revenue in CY 2018. Upon completion of the transaction, AxleTech will operate within Meritor’s Aftermarket, Industrial and Trailer segment. The deal is currently expected to close in the fourth fiscal quarter, subject to regulatory approvals and customary closing conditions.
A little more than two weeks ago, AxleTech sold its electric vehicle (EV) systems division to Allison Holdings as part of a pair of deals that also saw Allison acquire Vantage Power, a London-based technology company specializing in developing electrified propulsion.
After that deal was announced, AxleTech CEO Bill Gryzenia, in an interview with Diesel Progress said, “there’s no restrictions on AxleTech servicing the off-highway markets, which we have been doing for 100 years. We’re now going to be very busy developing solutions for the off-highway markets, including electric,”
Meritor said the deal advances its M2022 strategy 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, with a complementary global product portfolio across the off-highway, defense, specialty and aftermarket segments.
AxleTech brings independent suspensions, axles, braking solutions and drivetrain components to Meritor. “These capabilities will enable Meritor to offer global customers a wider array of differentiated products and solutions while further diversifying the company’s portfolio,” the company said in announcing the deal.
“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.”
Meritor said it expects to realize more than $15 million in annual cost synergies by fiscal year 2022, through operating, productivity and manufacturing efficiencies.