ABB, a leading power and automation technology
group, and Baldor Electric Co., a North
American leader in industrial motors, 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. The deal is subject to regulatory and shareholder
approval, but the combined company would become an even larger market leader in
industrial motion control.
"The value in this acquisition is mainly in
the fit between the two companies. The product lines are highly complementary
and there is almost no overlap," says Bob Fesmire, media relations manager for
Baldor is a leading manufacturer of electric
motors that fall under the NEMA specifications for the North American market,
and ABB offers motors with the IEC standard that basically serves Europe and
the rest of the world. "ABB is a major supplier of drives and motor
controllers, so we see a lot of synergy between marrying ABB drives with Baldor
motors," says Fesmire.
"Geographically, Baldor has a large footprint
in the U.S. market while ABB has a stronger market presence in other parts of
the world. The acquisition is subject to regulatory and shareholder approval,
but we're looking at the first quarter of next year to close the deal," he
The acquisition is expected to create growth,
enabling ABB to penetrate the North American
industrial market by using Baldor's strong
North American market access and allow Baldor to expand globally by using ABB's
distribution network abroad.
Approximately 30 percent of Baldor's revenue
comes from mechanical power transmission products such as gears and bearings. That
is a business where ABB has not been involved historically, but it offers a
major growth opportunity in the future.
Energy efficiency is another a key area for
the two companies with new U.S. standards implemented on December 19, 2010 that
will require motors sold after that date to meet the new standards. Baldor has
already been selling NEMA motors under the new standard, and have a robust
product line-up of energy efficient motors in an area that is expected to grow
10 to 15 percent in 2011. Similar regulations are expected in Canada, Mexico
and in the European Union beginning in 2011.
"Baldor is a great company with an extremely
strong brand in the world's largest industrial market," says Joe Hogan, ABB's
CEO. "Baldor's product range and regional scope are highly complementary to
ours and give both companies significant opportunities to deliver greater value
to our customers."
John McFarland, Chairman of the Board and CEO
of Baldor, comments: "Our Board of Directors believes this transaction is in
the best interest of our shareholders, our employees and our customers. We are
very pleased that ABB will locate its motor and generator business headquarters
for North America in Fort Smith and we are confident that the combined global
platform will be well positioned to capitalize on meaningful growth
opportunities in the future." It's been announced that McFarland will stay with
the combined business to support a successful integration.
Ron Tucker, Baldor's current president
and COO, and CEO designate will run Baldor including the mechanical power
transmission products business, and ABB's motor and generator business in North
America after the transaction is completed.