Eaton Settles Lawsuit With ZF Meritor - Quick Facts

(RTTNews) - Power management company Eaton Corp. Plc (ETN) has agreed to pay $500 million to ZF Meritor LLC, a joint venture between Meritor, Inc. (MTOR)'s unit and ZF Friedrichshafen AG, and Meritor Transmission Corp., as part of settling the antitrust lawsuit pending in the United States District Court, District of Delaware. The lawsuit was filed in 2006.

As per the agreement, Meritor will receive net proceeds of $209 million on or about July 15 and ZF Meritor LLC and Meritor Transmission Corp. have agreed to withdraw all pending antitrust litigation with Eaton.

Meritor's Chairman and Chief executive, Ike Evans, commented: "We have reached an agreement with Eaton that we believe is in the best interests of the Company and our shareholders. We'll use these proceeds to accelerate our efforts to achieve our balance sheet goals under our M2016 plan."

Further, Meritor said it will buy up to $210 million of the company's equity or equity-linked securities funded with a portion of future free cash flow. The firm expects repurchases to be made through open market or privately negotiated transactions, which would begin upon achievement of its M2016 debt reduction target. With the proceeds from the Eaton lawsuit deployed to pre-fund pension contributions, the company now expects to achieve this target in the second half of calendar year 2015.