ABB Deals for Motors, Drives Maker

Tuesday, November 30, 2010 @ 09:11 AM gHale

ABB will pay $4.2 billion to purchase industrial motor maker Baldor Electric Company.
The transaction adds the NEMA motors product line to ABB’s automation portfolio. Baldor also adds a growing mechanical power transmission business to ABB’s portfolio. Part of the deal includes picking up $1.1 billion in Baldor debt.
ABB is looking at the transaction to improve its access to the industrial customer base in North America, opening opportunities for ABB’s wider portfolio including energy efficient drives and complementary motors. This move comes at a time when regulatory changes in the U.S. and other parts of the world will accelerate demand for energy efficient industrial motion products. The acquisition will strengthen ABB’s position as a supplier of industrial motion solutions, and will also enable ABB to make a push in North America for rail and wind industries, two strong growth areas in the coming years.
“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.”
“Our Board of Directors believes this transaction is in the best interest of our shareholders, our employees and our customers,” said John McFarland, Baldor chairman and chief executive. “We are excited about the opportunity to join ABB’s worldwide family as we have always respected ABB. We are very pleased that ABB will locate its motor and generator business headquarters for North America in Fort Smith (AR) and we are confident that the combined global platform will be well positioned to capitalize on meaningful growth opportunities in the future.”
In addition to industrial motors, Baldor also makes mechanical power transmission products such as mounted bearings, enclosed gearing and couplings – used primarily in process industries – as well as drives and generators.
Baldor employs 7,000 people and reported an operating profit of $184 million on revenue of $1.29 billion in the first nine months of 2010. This represents an increase of 30% in operating profit and 11% in revenue over the comparable period in 2009.
The U.S. market for high-efficiency motors should grow 10 to15 percent in 2011 on the back of new regulations, effective in December this year. Similar regulations in Canada, Mexico and in the European Union are likely to come on line in 2011.

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