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Meritor Inc. is acquiring AxleTech in a deal to accelerate global sales and enhance the company’s growth platform in off-highway, defense and aftermarket segments.

Meritor reached an agreement with an affiliate of The Carlyle Group under which Meritor will acquire AxleTech for $175 million in cash, adjusted for changes in working capital at closing.

Meritor sees the acquisition as a way to accelerate global growth by leveraging AxleTech's core competencies in adjacent markets. AxleTech’s offerings include independent suspensions, axles, braking solutions and drivetrain components.

Both Meritor and AxleTech are based in Troy.

“AxleTech has positioned itself as a strong, advanced drivetrain solutions manufacturer in the off-highway and defense market segment,” AxleTech CEO Bill Gryzenia said in a statement. “These solutions range from heavy-duty axles to new remanufacturing capabilities and electric powertrain systems for our global customer base.”

Meritor expects to realize more than $15 million in annual cost synergies by fiscal year 2022, through operating, productivity and manufacturing efficiencies. The combination of AxleTech’s offerings with Meritor’s on-highway leadership will position the company to accelerate growth and deliver an enhanced value proposition to new and existing global customers.

Meritor plans to finance the transaction with a combination of cash on hand and debt. The company does not expect the transaction to materially change its net debt to adjusted EBITDA ratio for fiscal year 2019.

Upon completion of the transaction, AxleTech will operate within Meritor’s aftermarket, industrial and trailer segment. The transaction is currently expected to close in the fourth fiscal quarter, subject to regulatory approvals and customary closing conditions.