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ABB to Acquire Baldor Electric

ABB to Acquire Baldor Electric

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 ABB.

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 adds.

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.

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