Regal Beloit Corporation (RBC) recently announced its acquisition of Milwaukee Gear Company for a cash consideration of $80 million. Milwaukee Gear is a gearing solutions providing firm with a worldwide client base.

The acquisition is expected to provide a boost to Regal’s Mechanical segment by improving upon the end market situation and widening the gearing solutions suite of products. Revenues of around $60 million are expected to be added to the fiscal 2012 financial results of Regal Beloit along with an increase of 3 cents – 6 cents in diluted EPS. Furthermore, diluted EPS for 2013 is projected to rise about 12 cents – 16 cents due to the acquisition.

More details of the acquisition are expected to be declared during the final quarter financial results. As previously projected, the company expects adjusted EPS to range between 67 cents and 73 cents in its fourth quarter 2011.

During the third quarter the company reported a 10.2% year-over-year rise in revenues at the Mechanical segment on the back of robust demand from the end markets. Gross margin for the segment also increased to 28.2% compared with 26.5% in the third quarter of 2010. We hope that the Milwaukee Gear deal would fetch further profits in the long run.

Established in 1955 and headquartered at Beloit, Wisconsin, Regal Beloit Corp. is a leading manufacturer of electrical and mechanical motion control products. It operates primarily through two segments – Electrical and Mechanical – and is currently the second largest manufacturer of electric motors for industrial applications. The company’s primary competitors include Plug Power Inc. (PLUG), UQM Technologies Inc. (UQM) and Schneider Electric SA (SBGSY).

In the short run, the stock retains a Zacks #3 Rank, which translates into a short-term rating of Hold. We currently have a long-term Neutral recommendation on the company.

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