ABB will acquire Baldor Electric Company for US$4.2 billion – a move which will position ABB as the world leader in industrial motion technologies.
ABB and Baldor announced the acquisition to their shareholders yesterday, and recommended that ABB would acquire Baldor for $63.50 per share, in an overall transaction value of $4.2 billion, including a net debt of $1.1 billion.
The acquisition is said to be “In line with ABB’s strategy: establishes ABB as a leader in the multibillion dollar North American industrial motors business and a global leader for movement and control in industrial applications (industrial motion),” according to a media statement.
The two companies have highly complementary portfolios. Baldor’s current leading position in North American motors and ABB’s global leading position in drives and motors will mean the duo becomes a force to be reckoned with.
The move will enable ABB to penetrate the North American industrial market by using Baldor’s strong North American market access. It will allow Baldor to expand globally by using ABB’s distribution network abroad.
According to the companies, the acquisition comes at the perfect time to take advantage of additional growth for energy efficient motors and drives through the world in lieu of the upcoming implementation of new energy efficiency regulations in global markets.
ABB has promised to retain Baldor’s management team and brand name. Fort Smith in Arkansas, US remains the headquarters for Baldor, and will also become the headquarters for the combined motor and generator business for North America.
ABB expects the combination of the two companies will result in more than $100 million annual cost synergies and significant global revenue synergies of at least the same amount.
In fact, ABB claims the buy-out will be earnings accretive in only one year.