Emerson Electric, St. Louis, agreed to sell its Power Transmission Solutions (PTS) business unit to Regal Beloit Corp., Beloit, Wis., giving Regal Beloit, long known for motors, drives, generators, controllers and pumps, a major platform for expansion.
The transaction is valued at $1.44 billion, $1.4 billion in cash plus assumption of certain postretirement liabilities, and is expected to close in the first calendar quarter of 2015, subject to regulatory approvals.
“This acquisition will be transformational for Regal. PTS will broaden our portfolio, diversify our end market exposure and strengthen our global footprint,” said Regal Beloit Chairman and CEO Mark Gliebe in a release. “PTS brings complementary products and well-known brands, but more importantly a very talented team who are experts in their markets as well as very strong operators. We are excited to have PTS as part of the Regal family and we look forward to growing with them in our future.”
The Power Transmission Solutions business has been part of Emerson’s Industrial Automation segment, contributing 2014 revenue of more than $600 million. The unit is based in Florence, Ky., and employs over 3,000 people worldwide. The PTS business designs and manufacturers couplings, bearings, conveying components, gearing, drive components, and supporting services and solutions, with brands including Browning, Jaure, Kop-Flex, McGill, Morse, Rollway, Sealmaster, and System Plast.
Emerson said it will use the proceeds for share repurchases in fiscal 2015.
“While the Power Transmission Solutions business no longer aligns with the strategic direction of our portfolio, it is a strong business with an outstanding management team that has created significant value while part of Emerson,” said Chairman and Chief Executive Officer David Farr. “This transaction allows us to better focus on our value creation priorities and provides Regal Beloit with a unique opportunity to strengthen and grow its mechanical power transmission segment. I am grateful to the employees of Power Transmission Solutions for their commitment to growth and operational excellence throughout our long partnership. We will work closely with Regal Beloit to ensure a smooth transition for customers and employees.”
Regal Beloit’s existing stable of brands includes Fasco, Genteq, Marathon, Milwaukee Gear, Durst and Elco.