Baldor buys Rockwell motion unit for $1.8 billion, stock
Baldor Electric Co. signed a definitive agreement to acquire the Reliance Electric Co. and certain of its affiliated companies from Rockwell Automation for $1.8 billion. The Rockwell Power Systems business, previously reported up for sale, markets products under the Reliance Electric and Dodge brand names.
Baldor Electric Co. signed a definitive agreement to acquire the Reliance Electric Co. and certain of its affiliated companies from Rockwell Automation for $1.8 billion. The Rockwell Power Systems business, previously reported up for sale, markets products under the Reliance Electric and Dodge brand names. The brands complement Baldor's business in industrial electric motors, drives and generators, and the move gives Rockwell Automation stock in Baldor. Rockwell purchased Reliance in 1994 for $1.6 billion.
Baldor Electric Co. manufactures industrial electric motors, drives and generators, is headquartered in Fort Smith, AR, and had 2005 revenues of $721 million. Baldor has approximately 3,900 employees worldwide, 14 manufacturing facilities, and claims the highest customer preference in the industry. When completed, the transaction advances Baldor's capabilities among North American manufacturers of industrial electric motors and power transmission products.
Baldor will purchase 100% equity interest in the Power Systems business for $1.8 billion, comprised of $1.75 billion in cash and approximately 1.6 million shares of Baldor common stock (market value of $50 million). The parties expect to complete the transaction (subject to customary closing conditions and necessary regulatory approvals) during first-quarter 2007.
“The Reliance and Dodge businesses are a great fit with our existing businesses,” said John McFarland, chairman and chief executive officer of Baldor. “The Power Systems business will complement and add strength to Baldor's product line.”
The transaction provides a number of benefits and opportunities for Baldor customers, Baldor shareholders, and employees of each company. It extends the Baldor product line into power transmission products and larger motors; broadens Baldor products and services and investor interest; increases the combined manufacturing capability and flexibility; provides strong opportunities for synergies and cost savings in the combined businesses; provides a manufacturing base in China for Asian markets; and adds approximately $1 billion dollars in sales with margins higher than Baldor's existing business.
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