Advanced safety systems were one offering of the Meritor Wabco joint venture. Photo: Meritor Wabco

Advanced safety systems were one offering of the Meritor Wabco joint venture. Photo: Meritor Wabco

Wabco Holdings Inc. is expanding its operations in North America by taking full ownership of the Meritor Wabco joint venture.

Wabco announced Monday that it has signed an agreement to Meritor’s stake in the joint venture business for $250 million. The transaction is expected to close on October 1.  

Meritor Wabco, employing about 200 people, is headquartered in Troy, Michigan, and had sales of $300 million in fiscal year 2016. It currently sells and distributes a range of Wabco’s safety and efficiency technologies for commercial vehicles in North America. 

The agreement to take full control of the joint-venture business will enable Wabco to offer, all under the Wabco brand, its consolidated portfolio of products and systems, including 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. 

“The acquisition of the remaining stake in Meritor Wabco furthers our commitment to expand our presence in North America,” said Jacques Esculier, Wabco chairman and CEO.

Meritor 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.

"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," said Jay Craig, Meritor CEO and president.

Wabco says this consolidation of its business organization and broader access to market in North America will strengthen its relationships with commercial vehicle manufacturers and fleets through more simplified and direct channels.

Wabco will take over the former joint venture’s application engineering and supply chain operations, including the distribution center 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. 

Since 1990, the Meritor Wabco North American joint venture (originally Rockwell Wabco) has focused on the development and delivery of integrated safety technology and efficiency components, including braking systems and controls, active safety systems, and suspension and control systems, for commercial vehicles in North America.

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.

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 $225 million and $265 million based on the earnings of the business.