In a challenging market for auto and truck suppliers, Meritor (MTOR) had been doing okay since my last update, up slightly and keeping pace with Allison (ALSN) while outperforming American Axle (AXL), Cummins (CMI), Dana (DAN), and Tenneco (TEN), and the S&P 500. That performance trajectory spiked yesterday (February 22), with the announcement that the company had accepted a buyout bid from Cummins.
I like this deal for both parties, though arguably more for Cummins than Meritor. Cummins is paying a premium both to the current price and my own estimate of Meritor's fair value, and the Cummins acquisition gives shareholders cash upfront in exchange for the risks of how the EV market will develop in commercial trucks and how the heavy vehicle cycle will play out over the next years. For Cummins, I like this deal as a way of further integrating both its legacy powertrain operations and expanding its long-term leverage to vehicle electrification.
Read the full article at Seeking Alpha:
Cummins' Bid For Meritor Underlines The Value Of Quality ICE/EV Component Portfolios
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