BREAKING NEWS: Baldor to acquire Rockwell Power Systems business

11/07/2006


Baldor chairman and CEO John McFarland said he has always admired the Reliance and Dodge brands from afar. He now has a chance to get much better acquainted with them.

Baldor’s Nov. 7 announcement that it would acquire the two brands in Rockwell’s Power Systems division for $1.8 billion immediately doubled the size of Fort Smith, AR-based Baldor and diversified the company in the process. The deal, expected to close in early 2007, expands the company’s existing motors business and puts it into the power transmission business for the first time.

“I’ve long has respect for the way they operate in the market %%MDASSML%% the quality of their product and the quality of their people,” McFarland said. “Through this process, my respect for the company has really grown.”

The acquisition changes Baldor’s business in fundamental ways. Almost strictly a manufacturer of small industrial motors, Baldor gets Reliance’s large motors business and the power transmission business from Dodge. That will make power transmission 28% of Baldor’s expected sales in the future %%MDASSML%% a big change from not being in that market at all. Motors will now make up about 68% of Baldor’s sales while providing both large and small motors to its customers.

Another key is the existing manufacturing base Dodge has in China. “We’ve struggled with the issue of how to get into China,” McFarland said. “This gives us a platform for growth.”

Rockwell had announced its intention to sell off the Reliance and Dodge business units earlier this year. Both units are profitable, and McFarland said the chance to acquire strong companies with strong brands was attractive to Baldor.

“The two companies fit together well,” he said. “They all have strong brand preferences in the marketplace. It’s great to add such a powerful brand and company to the Baldor family.”

“Baldor is a great company with an outstanding management team,” said Keith D. Nosbusch, chairman and chief executive officer of Rockwell Automation. “I believe there is a compelling cultural and strategic fit between Baldor and our Reliance and Dodge businesses. Both organizations have similar operating philosophies and are committed to treating employees with respect, delivering high quality products and providing exceptional service to our customers. Power Systems will benefit significantly from ownership that is dedicated to investing on a global basis to create a leading motors and power transmission business.”

As part of Rockwell Automation, the Power Systems segment generated approximately $1 billion in revenue for the 12 months ending Sept. 30, 2006.





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