Baldor Electric Sold to Swiss Company ABB in $4.2 Billion Deal

by Gwen Moritz and Lance Turner  on Tuesday, Nov. 30, 2010 6:53 am  

Baldor CEO John McFarland said he's confident the combined operation will be "well positioned to capitalize on meaningful growth opportunities in the future."

Baldor Electric Co. of Fort Smith will be sold to Swiss power and technology company ABB in a deal valued at $4.2 billion, the two companies announced early Tuesday morning.

Under the terms of the agreement, unanimously approved by both companies' boards of directors, publicly traded ABB (NYSE: %%ABB%%) will pay $63.50 per share in cash. That represents a 41 percent premium over Monday's closing price for Baldor stock (NYSE: %%BEZ%%).

The deal, set to close in the first quarter of 2011, will put ABB in the U.S. for the first time. ABB said it will retain the Baldor brand, the company's Fort Smith headquarters and its management.

The announcement marks the biggest deal involving an Arkansas-based company since the sale of Alltel to Verizon announced in June 2008. 

Baldor, which makes electric motors and drives, is the seventh-largest publicly traded company in Arkansas by revenue, with $1.52 billion in sales in 2009 and $1.95 billion in 2008. It employs about 7,000 people in various locations in the U.S., Canada, England, Mexico and China.

The ABB Group of companies operates in about 100 countries and employs about 117,000 people. The company offers power and automation technologies for utility and industry customers to improve performance but lower environmental impact. 

Distribution, Efficiency

Baldor is particularly attractive to ABB because of its U.S. presence and its energy efficient motors.

The companies said the deal will enable ABB to penetrate the North American industrial market through Baldor's long-established distribution channels. And Baldor's energy efficient products will be in demand as new energy efficiency regulations come online in the U.S. and other markets.

ABB CEO Joe Hogan, a former CEO of the General Electric Co., told reporters in a conference call early Tuesday that he'd had Baldor in his sight "for a while." In a company video, he said the deal "helps us to balance our portfolio dramatically" by establishing a strong U.S. presence and fills gaps in the company's product lines.

"This is a new day for ABB in North America," he said.

McFarland to Aid Transition



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