425: Cummins Finalizes Separation of Atmus Filtration Technologies Through Exchange Offer

Cummins Inc. successfully completed the separation of Atmus Filtration Technologies by exchanging Cummins shares for Atmus shares, with the offer expiring on March 13, 2024.

Summary

• Cummins Inc. has finalized the separation of Atmus Filtration Technologies Inc. through an exchange offer.
• The exchange offer expired on March 13, 2024, at 12:00 midnight, New York City time.
• Cummins accepted 5,574,051 shares of Cummins common stock in exchange for 67,054,719 shares of Atmus common stock.
• The exchange offer was oversubscribed, leading to a pro rata acceptance of tendered shares, with a final proration factor of 6.99255200%.
• Shareholders owning fewer than 100 shares (odd-lot) who tendered all their shares were not subject to proration.
• Following the completion of the exchange offer, Cummins no longer holds any outstanding shares of Atmus common stock.
• Cummins reported net sales of approximately $34.1 billion for the year ended December 31, 2023.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the successful completion of the Atmus separation, which is expected to benefit both Cummins and Atmus shareholders. Management expresses optimism about the future prospects of both companies.

Positives

• Cummins successfully completed the separation of Atmus, which management believes will bring the greatest value to both Cummins and Atmus shareholders.
• The completion allows Cummins to focus on innovative power solutions.
• Atmus is now positioned to advance its filtration technologies and grow into new markets.
• Odd-lot shareholders were not subject to proration, ensuring their tenders were fully accepted.

Negatives

• The exchange offer was oversubscribed, resulting in a proration factor that reduced the number of Cummins shares accepted from larger shareholders.

Risks

• The document contains forward-looking statements that are subject to uncertainties, risks, and changes in circumstances that could cause actual results to differ materially.

Future Outlook

Cummins will focus on advancing innovative power solutions, while Atmus will advance its filtration technologies and grow into new markets. The document contains forward-looking statements that are subject to uncertainties, risks, and changes in circumstances that could cause actual results to differ materially.

Management Comments

• Through this final separation, we are pleased to bring the greatest value to both Cummins and Atmus shareholders, said Jennifer Rumsey, Chair and Chief Executive Officer of Cummins.
• Cummins will continue its focus on advancing innovative power solutions, while Atmus is now well positioned to advance its filtration technologies, grow into new markets, and help both existing and new customers be successful.
• We are proud of our employees hard work and all who were involved to ensure a successful separation, and we are excited to see what the future holds for both Cummins and Atmus.

Industry Context

This announcement reflects a trend of companies streamlining their operations by separating business units to allow for more focused growth strategies. Similar spin-offs and separations have been seen in other industrial sectors, where companies aim to unlock value by allowing individual entities to pursue specific market opportunities.

Comparison to Industry Standards

• The separation of Atmus from Cummins is similar to other corporate spin-offs, such as when Danaher spun off Fortive, allowing both companies to focus on their respective core competencies.
• The exchange offer mechanism is a common method for distributing shares in a spin-off, aiming to provide shareholders with a choice between retaining shares in the parent company or participating in the new entity.
• The proration factor indicates high interest in the Atmus shares, which is typical in spin-offs where the new entity is expected to have strong growth potential.

Stakeholder Impact

• Shareholders of Cummins and Atmus are expected to benefit from the increased focus and growth potential of the separated entities.
• Employees of both Cummins and Atmus are expected to benefit from the clearer strategic direction and opportunities for growth within their respective companies.
• Customers of both companies can expect continued innovation and improved service as each company focuses on its core competencies.

Next Steps

• Shares of Cummins common stock tendered but not accepted for exchange will be returned to the tendering shareholders.
• Shares of Atmus common stock will be credited to accounts maintained by the Atmus transfer agent for tendering shareholders whose shares of Cummins common stock were accepted.
• Cash in lieu of fractional shares of Atmus common stock will be delivered after the exchange agent has aggregated all fractional shares and sold them in the open market.

Key Dates