ABB will acquire Baldor Electric Company in an all-cash transaction valued at approximately $4.2 billion US, 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 November 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 NEMA motors product line. Baldor also adds a mechanical power transmission business to ABB’s portfolio. The transaction is expected to 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.
Ron Tucker, Baldor’s current president and COO, and CEO designate, will run Baldor, including the mechanical power transmission products business and ABB’s motor and generator business in North America, after the transaction is completed.
ABB will locate its motor and generator business headquarters for North America in Fort Smith, Arkansas, where Baldor is based.