Why Meritor Stock Is Soaring Today

Truck engine maker Cummins (NYSE: CMI) is making a big bet on the electrification of the transportation sector, on Monday announcing plans to acquire Meritor (NYSE: MTOR) for $3.7 billion in cash and assumed debt. That's a significant premium over Meritor's Friday close, and the target is up more than 45% as a result.

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Meritor is a maker of drivetrain, braking, and powertrain components for the commercial vehicle and industrial markets, a business that complements Cummins' core diesel engine operations well. But as importantly, Meritor is also a supplier of components for electric and hybrid drivetrains, an area that Cummins is trying to expand into.

Source Fool.com