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WABCO (WBC) Completes Stake Acquisition of Meritor WABCO JV

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WABCO Holdings Inc. (WBC - Free Report) announced completion of buying Meritor, Inc.’s (MTOR - Free Report) stake in Meritor WABCO joint venture (JV). After this purchase, WABCO achieves full ownership of the JV. The stake has been acquired at a price of $250 million.

This recent stake acquisition marks WABCO’s dedication to combine all its North American operations and unite the business under one brand. These business merging initiatives by the company will enable its customers to seamlessly access WABCO’s range of technologies.

Meritor WABCO’s operations will be merged into the acquiring company’s WABCO North America Business Unit.

Wabco Holdings Inc. Price and Consensus


Per management, this consolidation will help the company organize its business and access the North American market in a better way. In addition, this will intensify its connectivity with commercial vehicle manufacturers and fleet operators.

The joint venture, Meritor WABCO, employs roughly 200 employees and generated an annual sale of $300 million in 2016. The company currently sells and distributes WABCO’s safety technologies catering to the commercial vehicle market in North America.

Meritor is still WABCO’s exclusive distributor in the United States and Canada apart from being a non-exclusive distributor in Mexico. Both companies can end their distribution arrangement within the first three-and-half years. Depending on business earnings, the price for distribution termination can be pegged between $225 million and $265 million.

Price Performance

WABCO’s shares have surged 40.8% year to date, outperforming the 32.1% increase of the industry it belongs to.


Zacks Rank & Key Picks

WABCO currently carries a Zacks Rank #2 (Buy), while Meritor sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked automobile stocks are Daimler AG (DDAIF - Free Report) and Volkswagen AG (VLKAY - Free Report) , both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Daimler has a long-term growth rate of 2.8%.

Volkswagen has an expected long-term earnings growth rate of 8.9%.

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Meritor, Inc. (MTOR) - free report >>

Wabco Holdings Inc. (WBC) - free report >>

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