Belgium-based global technology company, WABCO, has announced that it will further expand its commitment and operations in the commercial vehicle market in North America by taking full ownership of the Meritor WABCO joint venture.
WABCO has signed an agreement to purchase Meritor’s stake in the joint venture business. WABCO’s purchase price was €209 million. The transaction is expected to close on 1 October 2017 and immediately prior to closing, Meritor will receive a final closing partnership distribution.
Meritor WABCO, employing approximately 200 persons, is headquartered in Troy, Michigan, USA and had sales of €250 million in fiscal year 2016. It currently sells and distributes a range of WABCO’s leading safety and efficiency technologies for commercial vehicles in North America.
“The acquisition of the remaining stake in Meritor WABCO furthers our commitment to expand our presence in North America,” said WABCO Chairman and CEO, Jacques Esculier. “By unifying our North America team, WABCO can unlock further value for our customers, including offering them seamless access to WABCO’s powerful technology and services portfolio, backed by the flexibility and efficiency of an integrated global supply chain.”
WABCO has said it is increasingly mobilising levels of vehicle intelligence and connectivity to help enable safer and more productive trucks, buses and trailers, as the commercial road transport industry strives for autonomous heavy vehicles.
“We strive to continually improve WABCO’s capability to serve commercial vehicle makers and fleets in North America, enabling delivery of goods and transportation of people as safely and efficiently as ever,” said WABCO President – Americas, Jon Morrison. “By combining our organisation under one brand and leadership structure, we can leverage and deploy, here in North America, the full breadth of WABCO’s leading technology portfolio to serve customers directly – as we do in the rest of the world.”
With this agreement, WABCO will take over the former joint venture’s application engineering and supply chain operations, including the distribution centre and customer service hub in Hebron, Kentucky. In addition, WABCO will continue to have exclusive access to a winter test track in Sault St. Marie, Michigan, and joint access to a year-round test track in East Liberty, Ohio to support local customers.
The agreement to take full control of the joint-venture business will enable WABCO to offer its consolidated portfolio of products and systems including its industry-leading wheel-end solutions, air disc brakes, autonomous braking, electronic stability and active steering control systems, alongside advanced driver assistance systems (ADAS) and a full range of aerodynamic, air management and transmission automation control products in North America.
Following closure of the buyout, WABCO has agreed for Meritor to continue to be its exclusive distributor for a certain range of WABCO’s Aftermarket products in the US and Canada, and its non-exclusive distributor in Mexico. In connection with the purchase transaction, both parties have the option to terminate the distribution arrangements at certain points during the first three and half years, for an exercise price between €188 million and €221 million based on the earnings of the business.
Meritor has reported that it intends to use the proceeds from the transaction toward its M2019 strategic priorities, which include paying down debt, funding strategic investments and repurchasing additional shares. In the near term, the company intends to pay down debt through the redemption of the remaining €146 million of outstanding 2021 notes.
“This transaction allows Meritor to allocate capital toward our strategic priorities and enhances our ability to achieve M2019 targets,” said Meritor CEO and President, Jay Craig. “The decision to sell our interest in the JV enables us to focus on strategic priorities that involve growing our on- and off-highway, specialty, components and aftermarket businesses, among other things.
“Our partnership with WABCO has created significant value for our shareholders over the past 27 years, and we are grateful for the work the Meritor WABCO team has done to make this joint venture successful. We are pleased with this outcome and look forward to continuing to execute on our M2019 plan that we believe positions Meritor for future growth,” he said.
Meritor WABCO was formed in 1990 and was dedicated to the delivery of advanced safety braking technology and efficient air brake systems for commercial vehicles in North America.
(image: WABCO President – Americas, Jon Morrison.)