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MERITOR TO ACQUIRE AXLETECH, ENHANCING GROWTH PLATFORM IN OFF-HIGHWAY, DEFENSE AND AFTERMARKET SEGMENTS

Complementary product portfolio to accelerate global sales and deliver differentiated value proposition to customers

Meritor, Inc. announced that it has entered into an agreement with an affiliate of The Carlyle Group, a global investment firm, under which Meritor will acquire AxleTech for approximately $175 million in cash, adjusted for changes in working capital at closing and subject to regulatory approvals and customary closing conditions.

The transaction advances Meritor’s M2022 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, bringing a highly complementary global product portfolio across the off-highway, defense, specialty, and aftermarket segments. AxleTech’s offerings include a full product line of independent suspensions, axles, braking solutions, and drivetrain components. These capabilities will enable Meritor to offer global customers a wider array of differentiated products and solutions while further diversifying the company’s portfolio.

AXLETECH

Headquartered in Troy, Michigan, AxleTech is a privately-held leading technology company that designs, engineers, manufactures, sells, and services drivetrain systems and components with a focus on off-highway applications. AxleTech generated $248 million in revenue in calendar year 2018.

“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,” Jay Craig, Meritor’s CEO and president, says. “Meritor’s technical expertise, operational excellence, and proven track record will be a powerful platform to accelerate growth. Our product portfolios are highly complementary and we share a commitment to our people and customers. We look forward to realizing the full benefits of the transaction by serving as a premier supplier to our global customers and enhancing shareholder value.”

“AxleTech has positioned itself as a strong, advanced drivetrain solutions manufacturer in the off-highway and defense market segments. These solutions range from heavy-duty axles to new remanufacturing capabilities and electric powertrain systems for our global customer base,” Bill Gryzenia, CEO, AxleTech, says. “Today marks an exciting chapter for AxleTech and reflects the collective efforts of our entire team. We believe that Meritor’s deep understanding of the business and best-in-class capabilities are a natural fit to support AxleTech’s next growth phase.”

COMPELLING STRATEGIC AND FINANCIAL BENEFITS:

Expands Customer Relationships and Enhances Growth. Meritor and AxleTech have complementary customer bases that will further diversify the company’s exposure in adjacent end-markets and enhance its ability to drive growth.

Substantial Synergy Opportunities. Meritor expects to realize more than $15 million in annual cost synergies by fiscal year 2022 through operating, productivity, and manufacturing efficiencies. The combination of AxleTech’s offerings with Meritor’s on-highway leadership will position the company to accelerate growth and deliver an enhanced value proposition to new and existing global customers.

FINANCING

Meritor intends to finance the transaction with a combination of cash on hand and debt. Meritor does not expect the transaction to materially change the company’s net debt to adjusted EBITDA ratio for fiscal year 2019.

CLOSING

Upon completion of the transaction, AxleTech will operate within Meritor’s Aftermarket, Industrial and Trailer segment. The transaction is currently expected to close in the fourth fiscal quarter, subject to regulatory approvals and customary closing conditions.

CONFERENCE CALL AND WEBCAST

Meritor will host a conference call and webcast to discuss the transaction today at 8:30 a.m. ET. To participate, call 844.412.1003 (within the United States) or 216.562.0450 (international) at least 10 minutes prior to the start of the call. Please reference passcode 7689957 when registering. Investors can also listen to the conference call in real time or access a recording of the call for seven days after the event by visiting the investors page on meritor.com.

A replay of the call will be available starting at 11:30 a.m. ET on May 8, 2019 until 11:30 a.m. ET on May 15, 2019 by calling 855.859.2056 (within the United States) or 404.537.3406 for international calls. Please refer to replay passcode 7689957. To access the listen-only audio webcast, visit meritor.com and select the webcast link from the investors page.

Find out more, visit www.meritor.com and www.axletech.com.

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