Cummins plans stock swap for former filtration business

Cummins will be offering a stock exchange program to help fully separate its former filtration business from the rest of the company.

The filtration business was started by Cummins in 1958, but the companies separated last year with an initial stock offering for the new Atmus Filtration Technologies Inc. Cummins still owns about 80 percent of the new company’s stock.

According to the Columbus based engine manufacturer, Cummins shareholders will have the option to exchange all, some or none of their shares of Cummins common stock for shares of Atmus common stock. The exchange is set to happen on March 7th, 8th and 11th.

Cummins stockholders will receive a 7 percent discount if they choose to swap for the new company’s stock. Until an upper limit on stock prices is hit, Cummins stockholders will be able to obtain about $107 of Atmus stock for every $100 of Cummins stock.

Cummins Chair and CEO Jennifer Rumsey said the separation will create value for both Cummins and Atmus. It will allow Cummins to “continue its focus on key strategic initiatives and innovating in core and new technologies,” while allowing the filtration business the flexibility to operate and to grow.

Cummins plans to distribute at least 33.5 million shares of Atmus common stock as a condition for the exchanges to be completed, along with other conditions. Cummins now owns about 67 million shares.

If you are interested in taking part you should contact your broker.

Cummins Press Release:

Today, Cummins Inc. (NYSE: CMI) (“Cummins”) announced that it will commence an exchange offer to fully split off its remaining interest in Atmus Filtration Technologies Inc. (NYSE: ATMU) (“Atmus”). In May 2023, Atmus completed its initial public offering where 19.5%, or 16,243,070 shares, of Atmus’ common stock was sold, with Cummins retaining the remaining 80.5% of Atmus’ common stock. Through the planned exchange offer, Cummins shareholders will have the option to exchange all, some or none of their shares of Cummins common stock for shares of Atmus common stock, subject to the terms of the exchange offer. The exchange offer is expected to be tax-free for U.S. Federal income tax purposes, except with respect to cash received in lieu of a fractional share.

“This separation will create value for both Cummins and Atmus, allowing Cummins to continue its focus on key strategic initiatives and innovating in both core and new technologies, while allowing the filtration business the ability to operate and grow with flexibility,” said Cummins Chair and CEO Jennifer Rumsey. “Leveraging its advanced filtration technologies and capabilities, Atmus is well positioned to grow into new markets and help both existing and new customers be successful. We believe now is the right time to distribute our Atmus shares, and we are confident that the share exchange is the appropriate path forward to bring the greatest value to shareholders. I am excited to see what the future holds for the company.”

The exchange offer is expected to permit Cummins shareholders to exchange all or a portion of their shares of Cummins common stock for shares of Atmus common stock at a 7% discount, subject to an upper limit of 13.3965 shares of Atmus common stock for each share of Cummins common stock tendered and accepted in the exchange offer. If the upper limit is not in effect, tendering shareholders are expected to receive approximately $107.53 of Atmus common stock for every $100 of Cummins common stock tendered.

Cummins will determine the prices at which shares of Cummins common stock and shares of Atmus common stock will be exchanged by reference to the arithmetic average of the daily volume-weighted average prices of shares of Cummins common stock and Atmus common stock on the NYSE during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer, which would be March 7, 8 and 11, 2024, if the exchange offer is not extended or terminated. The final exchange ratio, reflecting the number of shares of Atmus common stock that tendering shareholders will receive for each share of Cummins common stock accepted in the exchange offer, will be announced by press release by 5:30 p.m., New York City time, on the second trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 13, 2024). The final exchange ratio, when announced, and a daily indicative exchange ratio beginning on the third trading day of the exchange offer period, also will be available at www.okapivote.com/CumminsAtmusExchange.

The completion of the exchange offer is subject to certain conditions, including: at least 33,527,363 shares of Atmus common stock being distributed in exchange for shares of Cummins common stock validly tendered in the exchange offer; and the receipt of an opinion of counsel that the exchange offer will qualify for tax-free treatment to Cummins and its participating stockholders.

Cummins currently owns 67,054,726 shares of Atmus common stock, representing approximately 80.5% of the total outstanding shares of Atmus common stock. Cummins is offering to exchange 67,054,726 shares of Atmus common stock for outstanding shares of Cummins common stock in the exchange offer. If the exchange offer is consummated but not fully subscribed, Cummins intends to make a tax-free distribution to its shareholders of the shares of Atmus common stock that were offered but not exchanged in the exchange offer effected as a dividend on a pro rata basis to holders of Cummins common stock as of the record date.

Shareholders should reach out to their respective broker or provider for more information. Participation is voluntary and must be done by the established deadlines. No action is necessary for Cummins shareholders who choose not to participate.

The terms and conditions of the exchange offer will be outlined in a registration statement on Form S-4 to be filed by Atmus with the Securities and Exchange Commission (the “SEC”) and a tender offer statement on Schedule TO to be filed by Cummins with the SEC today.

Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC will serve as dealer managers for the exchange offer.