ABB Ltd. (ABB) recently completed its previously announced acquisition of a leading industrial motors company of North America, Baldor Electric Company, for $4.2 billion, including net debt of $1.1 billion. The transaction was initially announced on November 30, 2010.
The acquisition helps in achieving ABB’s goal of becoming a leader in the North American Industrial motors business and a leader in movement and control in industrial applications in global markets.
The inclusion of Baldor’s strong NEMA motors product line to ABB’s product portfolio and leverage from Baldor’s leading market position in industrial motors will aid ABB to overcome the loopholes in its automation portfolio in North America.
ABB also benefits from Baldor’s expanding and lucrative mechanical power transmission business. The company’s vast distribution network will help Baldor business to expand globally. The Baldor acquisition adds about 6,800 employees to ABB’s North American workforce, bringing the number of ABB’s employees in North Americato approximately 17,000.
In the previous release it was stated Baldor management and brand name will be maintained by ABB and the Fort Smith headquarters of Baldor will become ABB’s motor and generator business headquarters for North America. The merger is expected to provide $100 million annual cost synergies and global revenue synergies of atleast the same amount.
The increasing demand for energy-efficient motors favors the long-term prospects of ABB. Baldor’s high-efficiency motors will benefit ABB significantly as the U.S.market for these motors is expected to grow 10% to15% in 2011.
ABB Ltd. is a Zurich (Switzerland) based power and automation technology company. The company operates in approximately 100 countries structuring its global organization into five regions: Europe, the Americas, Asia, the Middle East and Africa. A major competitor of ABB is Siemens AG (SI).
We have a Zacks #2 Rank (short-term Buy rating) on ABB Ltd.
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