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A.O. Smith to sell electric motor division to Regal Beloit Corp.
- December 14, 2010
- News Release
- Shop Management
A. O. Smith Corp. has announced that it has entered into a definitive agreement to sell its Electrical Products Company, an operating segment that is one of the largest manufacturers of electric motors for residential and commercial applications in North America, to Regal Beloit Corp. for approximately $875 million, comprised of $700 million in cash and approximately 2.83 million shares of Regal Beloit common stock (having a market value of approximately $175 million based on the 10 day trailing average stock price). The transaction, which has been approved by both companies' boards of directors, is expected to close in the first half of 2011.
Commenting on the timing and the merits of the transaction, 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."
"We are very excited about the prospects of Electrical Products combining with Regal Beloit. We have tremendous respect for their organization and feel they are a world-class company. While we received strong interest from a number of companies, Regal Beloit's proposal provided the best value for our shareholders, customers, and employees. Regal Beloit has a long-standing track record for excellence in the manufacturing of mechanical and electric motion control and power generation products. Aligning our Electrical Products division with Regal Beloit will afford our customers and employees a platform with the size, scope, and global presence needed to be competitive in this dynamic market," Jones continued.
With the sale of its electrical products business, A. O. Smith'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. The company remains committed to building on its leadership in the water heating equipment business, continuing to offer a comprehensive product line featuring the best-known brands in North America and China.
Regal Beloit Corp., headquartered in Beloit, Wis., is a manufacturer of mechanical and electrical motion control and power generation products serving markets throughout the world. The company has manufacturing, sales, and service facilities throughout the U.S., Canada, Mexico, Europe, and Asia.
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