ABB, an automation company based in Zurich, and Baldor Electric Co., a manufacturer of industrial motors based in Fort Smith, Ark., have agreed that ABB will acquire Baldor in an all-cash transaction valued at approximately $4.2 billion, including $1.1 billion of net debt. Under the terms of the agreement, ABB will commence a tender offer to purchase all of Baldor's outstanding shares for $63.50 per share in cash. The transaction represents a 41% premium to Baldor's closing stock price on Nov. 29, 2010, with the deal expected to close in the first quarter of 2011. ABB will retain both the Baldor management and brand name. Fort Smith will remain the headquarters for Baldor, and will become the headquarters for the combined motor and generator business for North America.
According to company sources, the transaction closes a gap in ABB's automation portfolio in North America by adding Baldor's NEMA motors product line and positions the company as a market leader for industrial motors, including high-efficiency motors. Baldor also adds a growing and profitable mechanical power transmission business to ABB's portfolio. The transaction will improve ABB's access to the industrial customer base in North America, opening opportunities for ABB's wider portfolio including energy-efficient drives and complementary motors.
The 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 U.S. market for high-efficiency motors is expected to grow 10% to 15% in 2011 due to new regulations, effective in December 2010. Similar regulations in Canada, Mexico, and the European Union are expected in 2011. For more information, visit abb.com and baldor.com.