ABB will acquire Baldor Electric Company in a transaction valued at approximately $4.36 billion, including $1.14 billion of net debt.
The transaction closes a gap in ABB’s automation portfolio 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.
Baldor offers a range of mechanical power transmission products such as mounted bearings, enclosed gearing and couplings – used primarily in process industries – as well as drives and generators. The Baldor drives business will be combined with the larger ABB drives business to achieve further penetration of this product line.
The transaction will open opportunities for ABB’s wider portfolio including energy efficient drives and complementary motors. This move comes at a time when regulatory changes will accelerate demand for energy efficient industrial motion products.
“Baldor is a great company with an extremely strong brand in the world’s largest industrial market,” said 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, CEO of Baldor, commented: “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 capitalise on meaningful growth opportunities in the future.”
Baldor employs approximately 7,000 people and reported an operating profit of $191 million on revenue of $1.34 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.
Under the terms of the agreement ABB will commence a tender offer to purchase all of Baldor’s outstanding shares. The deal is expected to close in the first quarter of 2011.