Cummins Inc. has filed a confidential registration to sell shares in its filtration business through an initial public offering as it focuses on its pending $3.7 billion purchase of Meritor Inc.
The spinoff of the $1.2 billion filtration business into a separate company became public as part of the second-quarter 2021 earnings report. The filtration business dates to 1958. It offers products for on-highway, heavy-, medium- and light-duty trucks, off-highway industrial equipment, and power generation. Major markets are North America, India and China.
“Cummins Filtration has grown consistently, and as an independent company, would have the opportunity to accelerate growth as it further diversifies into new products and end markets,” Cummins said last year.
The separation will create value for both companies. Cummins (NYSE: CMI) can focus on key strategic initiatives like the Meritor purchase.
Going it alone will allow greater operating flexibility for the filtration business, Cummins said in its full-year 2021 earnings.
Filtration IPO details pending
The confidential registration S-1 filed by the Columbus, Indiana-based company on Thursday did not disclose the number of shares or the price range it would seek in taking the company public.
Cummins repurposed filtration material to make N-95 masks during the first wave of the COVID pandemic last year.
Cummins is paying $3.7 billion for Meritor as it transforms from solely a leading maker of diesel engines into electric powertrains and zero-emissions technologies. The deal will allow Cummins to package Meritor’s popular electronic axle with other electric powertrain components in its New Power division.
New Power is the exemplar of Cummins’ transformation from an old-line diesel engine maker to a serious player in electrification, fuel cells and hydrogen production.
Between engines, components and transmission, Cummins today covers around 34% of the scope of supply for a heavy-duty truck. Adding Meritor’s (NYSE: MTOR) products would give Cummins 60% of a fuel cell version and 45% of a battery-electric, said Amy Davis, the president of New Power.