ABB to acquire Thomas & Betts for $3.9 billion
February 1, 2012 by Manufacturing AUTOMATION
ABB, a provider of power and automation technology, will acquire Thomas & Betts Corporation, a provider of low-voltage products, for $72 per share in cash, or approximately $3.9 billion US.
The acquisition price represents a 24 percent premium to Thomas & Betts’ closing stock price on January 27, 2012, and a 35 percent premium to the volume weighted average stock price over the past 60 trading days. The transaction is subject to approval by Thomas & Betts shareholders, as well as to customary regulatory approvals, and is expected to close by the middle of 2012.
The complementary combination of Thomas & Betts’ electrical components and ABB’s low-voltage protection, control and measurement products would create a broader low-voltage portfolio that can be distributed through Thomas & Betts’ network of more than 6,000 distributor locations and wholesalers in North America, and through ABB’s well established distribution channels in Europe and Asia. The combined product portfolio and enhanced distribution network will enable ABB to double its addressable market in North America to approximately $24 billion US.
“Thomas & Betts is a well-run company with strong brands and excellent distribution channels in the world’s largest low-voltage products market,” said Joe Hogan, ABB’s CEO. “Because our products are complementary, we’ll go to market with one of the broadest offerings in the industry. That creates strong growth opportunities for both ABB and Thomas & Betts, and gives customers and distributors one-stop access to one of the widest ranges of low-voltage products.
“Strategically, it’s a great fit,” Hogan added. “This is another big step toward our goal of expanding our presence in the key North American market. The transaction clearly supports our 2015 growth and profitability targets, and meets all of our return-on-investment criteria for creating shareholder value.”
“This transaction delivers significant value to our shareholders and will enable Thomas & Betts to accelerate our global growth strategy,” said Thomas & Betts chairman and CEO Dominic J. Pileggi. “The combination will also enable us to provide our North American customers and distributor network with a broader portfolio of products, and will provide long-term opportunities to our employees. This is the right time for this transaction and I believe strongly that ABB is the right partner for our business going forward.”
Thomas & Betts, combined with ABB’s North American low-voltage products business, will become a new global business unit led out of Memphis, Tenn., under the leadership of Pileggi.
Thomas & Betts employs approximately 9,400 people. Its main business is the manufacture of low-voltage and ultra low-voltage electrical products, such as connectors, conduits and fittings, as well as wiring management products for the construction, industrial and utilities markets. These are complementary to the offering of ABB’s low-voltage products division, which includes products such as breakers and switches. Thomas & Betts also supplies towers for electrical power transmission and has a business that produces heating, ventilation and air conditioning units, both new to ABB but related to its core power and automation focus.
“This is a unique opportunity for ABB to grow in the largely untapped North American low-voltage products market,” said Tarak Mehta, executive committee member responsible for ABB’s low-voltage products division, into which Thomas & Betts will be integrated as a stand-alone unit. “We plan to keep and build on Thomas & Betts’ strong brand and product names. We have complementary products that can be sold together already today and other products that will take some time to introduce to customers.”