ABB will pay $63.50 per share in cash for NYSE-listed Baldor, a 41 per cent premium to Baldor’s closing price on 29 November. The deal values the company at $4.2bn, including $1.1bn of net debt.
The deal is ABB’s first major US acquisition and fits with its strategy to both close a gap in its automation portfolio and strengthen its north American presence.
The Swiss firm expects to generate more than $200m in annual synergies by 2015, more than $100m of which would come from annual cost synergies and the rest from global revenue synergies, it said.
“Baldor’s product range and regional scope are highly complementary to ours,” said ABB chief executive Joe Hogan in the statement.
ABB’s move was anticipated as it had said it was looking for acquisitions, in possibly the automation sector, or the US, and had accumulated a cash pile of $5.3bn at the end of its third quarter trading this year.
ABB will benefit from Arkansas-based Baldor’s motor and control system ranges, including its high-efficiency motors and mechanical power transmission business.
“We intend to build on Baldor’s excellent North American position to sell energy efficient drives, larger motors and generators,” said ABB Executive Committee member Ulrich Spiesshofer.
Baldor, which was established in 1920 and now has about 7,000 employees, achieved 2009 sales of $1.52bn and net earnings of $59.8m.
The deal has been unanimously approved by all shareholders, the companies said.
Citi served as financial adviser to ABB and UBS Investment Bank served as financial adviser to