Another mega-deal in the motor market: Regal Beloit to buy A.O. Smith's motor business for $875 million
In the second blockbuster deal in the motor industry in just two weeks, A. O. Smith Corp. (AOS) Milwaukee, announced plans to sell its Electrical Products Co. one of the largest manufacturers of electric motors for residential and commercial applications in North America, to Regal Beloit Corp. (RBC), Beloit, Wis., for approximately $875 million. The transaction, which has been approved by both companies' boards of directors, is expected to close in the first half of 2011.
In a press statement on the sale, A. O. Smith Chairman and Chief Executive Officer Paul W. Jones said, "The electric motor industry has been undergoing a significant transformation over the last several years due to global consolidation and the emergence of a number of international competitors. The consolidation in the marketplace, which has accelerated this year, prompted us to evaluate the potential sale of our motor business, with the expectation that we would reinvest the proceeds into high growth opportunities."
A press release on Regal Beloit's website said four key reasons for its acquisition of the A.O Smith business were its complementary product portfolio; technology for variable speed hermetic applications; patent portfolio with nearly 150 patents; and the expansion of the company's global manufacturing capabilities. With the sale of its electrical products business, A. O. Smith Corporation's core business will be manufacturing residential and commercial water heating equipment and water purification equipment, which reported sales of $1.1 billion for the first nine months of 2010.
Until ABB's recent acquisition of Baldor Electric Co., another motor giant, the energy-saving capabilities of the latest in lighting systems have gotten more press in the green market in recent years than energy-efficient motors, even though they also have a proven track record in slashing facilities' utility bills and also attract millions of dollars in utility rebates. Look for details on the acquisition in next week's issue of Electrical Marketing.
About the Author
Jim Lucy Blog
Chief Editor
Jim Lucy has been wandering through the electrical market for more than 30 years, most of the time as an editor for Electrical Wholesaling, Electrical Marketing newsletter and CEE News. During that time he and the editorial team for the publications have won numerous national awards for their coverage of the electrical business. He showed an early interest in electricity, when as a youth he had an idea for a hot dog cooker. Unfortunately, the first crude prototype malfunctioned and the arc nearly blew him out of his parents' basement. Before becoming an editor for Electrical Wholesaling magazine and Electrical Marketing, he earned a BA degree in journalism and a MA in communications from Glassboro State College, Glassboro, NJ., which is formerly best known as the site of the 1967 summit meeting between President Lyndon Johnson and Russian Premier Aleksei Nikolayevich Kosygin, and now best known as the New Jersey state college that changed its name in 1992 to Rowan University because of a generous $100 million donation by N.J. zillionaire industrialist Henry Rowan. Jim is a Brooklyn-born Jersey Guy happily transplanted in the fertile plains of Kansas for the past 20 years.