Swiss power and automation technology supplier ABB announced in late November that it had arranged to acquire Baldor Electric Co., a major industrial motor supplier based in Fort Smith, Arkansas, USA, for about $4.2 billion including $1.1 billion of debt. The all-cash deal, which has the approval of both companies’ boards of directors, is expected to close in the first quarter of 2011. The acquisition, according to a press statement issued by ABB, closes a gap in its automation portfolio in North America by adding Baldor’s NEMA motor product line and better positions the company in the market for industrial motors, including high-efficiency motors. The acquisition also will add Baldor’s mechanical power transmission business to ABB’s portfolio.
Ron Tucker, Baldor’s current president and COO and CEO designate, will oversee Baldor including the mechanical power transmission products business and ABB’s motor and generator business in North America after the transaction is completed. Baldor employs approximately 7,000 people and reported an operating profit of $184 million on revenue of $1.29 billion in the first nine months of 2010. This represents an increase of 30% in operating profit and 11% in revenue over the comparable period in 2009. According to ABB, the U.S. market for high-efficiency motors is expected to grow 10–15% in 2011 due to new energy-related regulations taking effect in 2010. Similar regulations in Canada, Mexico and in the European Union are expected in 2011.
Ulrich Spiesshofer, Executive Committee member responsible for ABB’s Discrete Automation and Motion division, into which Baldor’s business will be integrated alongside the existing Motors and Generators business, said, “We expect to achieve over $200 million in annual synergies by 2015, consisting of more than $100 million annual cost synergies and at least the same global revenue synergies. We estimate two-thirds of these synergies will be realized by 2013.”
