U.S. truck engine maker Cummins Inc said on Tuesday it will buy auto parts maker Meritor Inc for $2.58 billion in cash, to beef up its electric and hybrid vehicle parts offerings amid a boom in demand for climate-friendly transport.
, Navistar and Daimler , said it hoped to quicken Meritor's investment in electrification and integrate with its own segment that makes electrified power systems.Meritor shares were up 43% at $35.50 before the bell and were set to open at a record high if the gains held. Cummins shares were up 1.3%.
Cummins said the addition of Meritor, which also makes axle and brake technology, will also add to the Indiana-based company's 'powertrain' business. A powertrain is an assembly of every component that pushes a vehicle forward. The company said the merger is expected to generate pre-tax savings of about $130 million in the third year after closing.The company said it will pay for the deal, which is valued at $3.7 billion on an enterprise basis, using cash and debt.Reporting by Aishwarya Nair in Bengaluru; Editing by Krishna Chandra Eluri
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