Engine maker Cummins Inc. said Tuesday its deal for Brammo Inc. could exceed the initial $70 million acquisition price.
In a Securities and Exchange Commission filing, the Columbus, Indiana, company said the owners of the Talent lithium ion battery engineering and manufacturing firm could receive up to an additional $100 million, based on the technology's performance.
Cummins entered into a purchase agreement with Brammo on Oct. 12, after the close of third quarter. In the filing, Cummins confirmed it would pay approximately $70 million in cash at closing, expected later this quarter. Brammo, founded by Craig Bramscher, has acquired dozens of investors over past 12 years.
"The agreement contains an earnout based on future results of the acquired business," the company said in its filing. A Cummins spokesperson declined to offer further details of the agreement.
Cummins said in the filing the majority of the purchase price likely will be assigned to intangible assets and goodwill.
During a conference call, Chairman and CEO Tom Linebarger said the longtime diesel and natural gas engine maker was gaining momentum in its electric technology efforts.
"Cummins will gain access to new markets and generate revenues from Brammo's existing industrial customer base, while continuing to advance the optimization of battery packs, learning from the real-world operation of a technology and demand in custom applications," Linebarger said.
Cummins' bottom line soared as it reported a 57 percent net income increase to $453 million from $289 million during the same period the previous year. With trucking, oil, gas and construction activity increasing, revenue grew 26 percent in the quarter to $5.3 billion from $4.2 billion the same quarter in 2016.
Cummins' international sales grew 28 percent, boosted by truck and construction demand in China, new product sales in India, and increased demand from global mining.
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