Cummins to acquire Jacobs Vehicle Systems
Cummins has reached an agreement to acquire Jacobs Vehicle Systems (JVS). The acquisition is expected to close by the end of the year, subject to customary closing conditions.
Acquisition of JVS
The acquisition will give Cummins access to valuable new technology, which should strengthen the development of Cummins’ advanced diesel engine platforms. It should also help the company gain valuable engine components that meet USMCA (U.S.-Mexico-Canada Agreement) requirements, as well as strengthen the success of Cummins Turbo Technologies.
The acquisition marks a step forward in Cummins’ strategy to reduce greenhouse gas emissions. The emphasis on engine braking and cylinder deactivation will be key in enabling the company to meet current and future emissions standards.
Following the acquisition, Cummins will maintain a relationship with all JVS customers. There are also plans to offer increased value and added value to customers of both companies. Cummins plans to increase capacity and resources at the two JVS manufacturing facilities in the US and China.
UBS analyst Stephen Fisher recently reiterated a “Buy” recommendation on the company’s stock, but lowered the target price from $270 to $260. Fisher’s lowered target price implies a 15.30% upside potential.
The consensus analysts’ forecast is “Moderately Buy” (based on 3 “Buy” and 4 “Hold” recommendations). The average target price for Cummins stock is $266.86, implying an upside of 18.34% from current levels.