Meritor To Sell Its Interest In Meritor WABCO JV

(RTTNews) - Meritor Inc. (MTOR) said that it agreed to sell its interest in the Meritor WABCO joint venture with WABCO Holdings Inc. (WBC) to WABCO. The total purchase price for the sale is $250 million, and Meritor will also receive a final partnership distribution immediately prior to the closing. The transaction is expected to close on October 1, 2017.

Following the closing, Meritor will continue to provide sales, service and training to Meritor WABCO customers through its DriveForce team for up to two years, and call center services for customer support and the processing of warranty claims for a period of approximately one year.

In addition, Meritor will remain the exclusive distributor of a certain range of WABCO's aftermarket products in the United States and Canada, and the non-exclusive distributor in Mexico, following the completion of the transaction through an aftermarket distribution agreement.

The parties have agreed to options that allow either party to terminate, at certain points during the first three and a half years, these distribution arrangements at an exercise price of between $225 million and $265 million based on the earnings of the business.

Meritor noted 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 $175 million of outstanding 2021 notes.