Automation and power technology vendor ABB announced today that it will acquire Baldor Electric Co. in a $4.2 billion cash deal. The acquisition, expected to be completed by early next year, will position ABB as a leading provider of industrial motion products in the North American market, the company said.
Under the terms of the definitive agreement, which has been unanimously approved by both companies’ boards of directors, the automation giant will purchase all of Baldor’s outstanding shares for $63.50 per share and will assume $1.1 billion of Baldor’s net debt. The $63.50 share price is 41% above Baldor’s closing stock price on Nov. 29, a premium that is well worth the money, ABB CEO Joe Hogan said in an analyst conference call this morning. Fort Smith, AR-based Baldor said it anticipates revenue of $1.7 billion in 2010.
Baldor’s product portfolio, including AC, DC, and servo motors; mechanical power transmission technology; drives; and generator products, complements ABB’s large-scale power and generator portfolio, according to the companies. More importantly, it gives Zurich, Switzerland-based ABB an immediate presence in the North American market for those products. Baldor’s reach includes 400 field salespeople, 6,000 OEMs, 4,000 distributors, and 100 direct salespeople for the mechanical power transmission business, ABB said. Furthermore, ABB and Baldor share a common end-user base in industries such as oil and gas, petrochemical, mining, pulp and paper, and food and beverage.
“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,” Hogan said. “It closes a gap in our motor offering….and it is a big step toward achieving our goal of increasing ABB’s exposure in North America.”