ABB to acquire Baldor

ABB and Baldor Electric Company have agreed that ABB will acquire Baldor in an all-cash transaction valued at approximately US$4.2 billion, including $1.1 billion of net debt.

Under the terms of the definitive agreement, which has been unanimously approved by both companies’ Boards of Directors, 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 29 November 2010. The Board of Directors of Baldor will recommend that Baldor shareholders tender their shares in the tender offer. The deal is expected to close in the first quarter of 2011.

The transaction closes a gap in ABB’s automation portfolio in North America by adding Baldor’s strong 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 substantially 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. This move comes at a time when regulatory changes in the US 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 tap the huge potential in North America for rail and wind investments, both of which are expected to grow rapidly in coming years.

Under the terms of the merger agreement, the transaction is structured as a cash tender offer to be followed as soon as possible by a merger. The tender offer is expected to commence in December and is subject to customary terms and conditions, including the tender of at least two-thirds of Baldor's shares on a fully diluted basis, and regulatory clearance.