Nov 30 2010
ABB, a Swiss group company, is planning to acquire Baldor Electric Company, an American motor fabricator, for $3.1 billion. ABB is an automation expert and has provided a share of $63.50 for Baldor, moving to North America, supplying access to Baldor to world-wide markets for their electric motors for industrial applications.
According to Joseph M. Hogan, the American chief executive at ABB, the company is advancing in the United States, and is reinvigorating its financial status and updating its physical plants. JPMorgan analysts stated that this agreement will widen ABB’s value in the U.S. industrial automation business.
Baldor’s less-voltage motors are superior to that of ABB’s motors and by acquiring them ABB can advance their product series, says Hogan. Their shift into the United States will improve the company’s engineering-based solutions to gain a wide market. ABB will have more market for its drives, or for the section of the motor that smoothens its primary kick.
The contract will be finalized in the early months of 2011, and the companies anticipate yearly savings of $100 million by the year 2015. The company decides to maintain Baldor’s management in place and will set up its headquarters in Fort Smith.ABB also will take up Baldor’s debt worth $1.1 billion.
Baldor experienced a third-quarter income of $25.7 million during last month, which is a 104% hike from the previous periods. However, its shares decreased $0.46, or 1.01% to $45.11 recently and ABB’s deal provides a 41 5 premium for them.
The United States Energy Independence and Security Act of 2007 will be implemented on December 19, and according to Baldor this will have a significant effect on the market of electric motors. This law enhances the minimal efficacy of such motors, which Baldor markets at 20–30% premium. The companies hope that the American business for their motors will exceed to 10–15% by 2011.
Electric motors are predicted to utilize nearly one-third of the global power. Citigroup will be ABB’s economical adviser and Baldor has hired UBS as their financial adviser.
Source: http://www.abb.com