ABB buys Baldor for $3.

1 bn to bolster drives
BLOOMBERG Berlin, 30 November

BB Ltd, the Swiss maker of factory robots and power transmission gear, agreed to buy Baldor Electric Co for about $3.1 billion in cash to expand in the North American market for industrial motors and drives. Shareholders of Fort Smith, Arkansas-based Baldor will receive $63.5 a share, ABB said in a statement today. Thats 41 per cent higher than Baldors closing price of $45.11 yesterday. The deal, in which A file photo of an ABB plant in Hanau, Germany ABB will also assume an additional $1.1 billion in debt, is gramme, and ABB said today billion purchase of American expected to close in the first that integrating Baldor will gen- Power Conversion Corp in 2006, quarter. erate more than $100 million the data show. Chief Executive Officer Joe in initial annual savings. The Based on Baldors forecast Hogan has increased the pace former General Electric Co ex- earnings before interest and of acquisitions as he puts ecutive took over at ABB in 2008 tax of $294 million for 2011, Zurich-based ABBs $5.3 bil- with a track record of deal-mak- ABB is paying about 14 times lion in net cash to use. He pur- ing, including the purchase projected earnings, compared chased software maker Ventyx of UK-based Amersham Plc for with about 16 times earnings Inc for more than $1 billion this about $10 billion in 2004, then for the average multiple in the year, and made an offer for GEs biggest acquisition. industry in the last five years, Chloride Group Plc, only to be Hogan told journalists on a the data show. outbid by Emerson Electric Co. call that he had had Baldor The strategic fit looks good, Hogan said today he still has in his sight for a while, and but comes at a price, said eqexcess cash and will contin- that the two companies came uity analysts James Stettler and ue to seek deals. in close contact over the last Alasdair Leslie of UniCredit in We see significant poten- six months. There are no signs a note to clients today. tial for ABB to use Baldor dis- of a counter-bid for the comThe purchase will add to tribution to expand its drives pany, and ABB feels confident earnings in the first year, and business in the US, as well as it is bidding an attractive pre- existing management will be a more general build out of mium, Hogan said. kept in place, ABB said. Fort its discrete automation busiWeve been looking at op- Smith will become the headness, said Goldman Sachs portunities for over a year now, quarters for the combined moGroup analysts led by Tim Roth- the executive said on the call. tor and generator business for ery in a note to clients today. North America. Baldor CEO John McFarEarnings boost Cost cuts The average premium paid for land, who will step down at the ABB rose as much as 0.17 Swiss electrical-components compa- end of the year and be sucfrancs, or 0.8 per cent, to 19.69 nies over the past five years was ceeded by Chief Operating Offrancs, and traded at 19.57 about 14 per cent, with $70.4 ficer Ronald E. Tucker, said his francs as of 12.22 pm in Zurich. billion of total transactions dur- company backs the bid as beThe stock has lost 1.9 per cent ing the period, according to da- ing in the best interest of our ta compiled by Bloomberg. The shareholders, our employees in value this year. Hogan is close to complet- biggest deal in the period was and our customers, according ing a $3 billion cost-cutting pro- Schneider Electric SAs $6.1 to the statement.