Regal Beloit Corporation (RBC) recently announced that it will acquire 100% of the stock and assets of Electrical Products Company (“EPC”) from A.O. Smith Corporation (AOS) for approximately $875 million. The total consideration for the acquisition comprises $700 million of cash and approximately $175 million in shares of Regal Beloit common stock.
This is the seventh acquisition for Regal Beloit. The company expects the acquisition to add approximately $700 million to the top line and become accretive (excluding one-time items) by roughly 25 cents to 30 cents in the first full year following the acquisition. The transaction is expected to close in the first half of 2011. Regal Beloit expects to incur a vast majority of these expenses in the first quarter following the close of the transaction.
Based in Tipp City, Ohio and employing approximately 7,800 people, EPC manufactures and sells a full line of motors for hermetic, pump, distribution, heating, ventilation and air conditioning (HVAC) and general industrial applications. EPC, with a patent portfolio of over 150 patents, has motor manufacturing facilities in the United States, Mexico, China, and the United Kingdom. EPC generated approximately $688 million of revenue in the last twelve months.
Headquartered in Beloit, Wisconsin, Regal Beloit manufactures mechanical and electrical motion control and power generation products. Regal Beloit continues to acquire businesses that include energy efficiency technology, strengthen its geographic footprint and offer a synergistic fit.
Management believes that EPC has a complementary product portfolio with Regal Beloit and has targeted synergies of $30 million–$40 million spanning over three to four years from this acquisition. EPC is a leader in the hermetic motor space and with this acquisition Regal Beloit expects to enter that territory. Management also expects that the acquisition of EPC will strengthen Regal Beloit’s presence in low-cost manufacturing locations and provide consolidation opportunities.
Shares of Regal Beloit gained 4.20% with the acquisition news to close at $66.43 in regular trading.
SMITH (AO) CORP (AOS): Free Stock Analysis Report
REGAL BELOIT (RBC): Free Stock Analysis Report
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