ABB and Baldor Electric Company 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 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 percent premium to Baldor's closing stock price on Nov. 29, 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 United States and other parts of the world will accelerate demand for energy efficient industrial motion products. The acquisition will strengthen ABB's position as a leading 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.
"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."
John McFarland, chairman of the board and CEO of Baldor, commented: "Our board of directors believes this transaction is in the best interest of our shareholders, our employees and our customers. It demonstrates the value our employees have created and the strength of our brand and products in the global motors industry. 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 and we are confident that the combined global platform will be well positioned to capitalize on meaningful growth opportunities in the future."