ABB is firming up its position as a global supplier of industrial motors with the $4.2 billion purchase of the Baldor Electric Co.
A Baldor-Reliance motor and a Dodge gearbox on a conveyor in a food processing plant.
The companies said in a combined press release the transaction gives ABB, a power and automation company, greater access to the North American market.
It also closes a gap in ABB’s automation portfolio with the addition Baldor’s NEMA motors and a growing mechanical power transmission business and positions the Zurich-based company for greater access to growing rail and wind markets in the North American market.
For Baldor, the deal means an extended global reach using ABB’s distribution network.
The timing coincides with new energy efficiency regulations in the US market. Demand for high-efficiency motors is expected to grow 10% to 15% in 2011. Similar regulations are expected in Canada, Mexico and in the European Union.
Under the terms of the acquisition, Baldor will remain based in Fort Smith, Ark., keep its current management and continue to sell Baldor brands. Fort Smith also becomes headquarters for ABB’s combined motor and generator business for North America.
The companies anticipate costs savings of $100 million and significant global revenue synergies of “at least” the same amount.
Baldor employs 7,000 people and had an operating profit of $184 million on revenue of $1.29 billion in first nine months of 2010.