Power and automation technology group, ABB and Baldor Electric Company have agreed that ABB will acquire Baldor in an all-cash transaction valued at approximately $4.2 billion, including $1.1 billion of net debt.
Under the terms of the definitive agreement, which has been unanimously approved by both companies’ boards of directors, ABB will commence a tender offer to purchase all of Baldor’s outstanding shares for $63.50 per share in cash.
The transaction closes a gap in ABB’s automation portfolio in North America by adding Baldor’s NEMA motors product line and positions the company as a market leader for industrial motors, including high-efficiency motors. Baldor also adds a growing and profitable mechanical power transmission business to ABB’s portfolio.
The transaction will substantially improve ABB’s access to the industrial customer base in North America, opening opportunities for ABB’s wider portfolio including energy efficient drives and complementary motors. This move comes at a time when regulatory changes in the US and other parts of the world will accelerate demand for energy-efficient industrial motion products.
The acquisition will enable ABB to tap the potential in North America for rail and wind investments, both of which are expected to grow rapidly in coming years.
Baldor employs approximately 7000 people and reported an operating profit of $184 million on revenue of $1.29 billion in first nine months of 2010. This represents an increase of 30 per cent in operating profit and 11 per cent in revenue over the comparable period in 2009.
The US market for high-efficiency motors is expected to grow 10 to 15 percent in 2011 on the back of new regulations, effective December 2010. Similar regulations in Canada, Mexico and in the European Union are expected in 2011.