Regal Beloit Closes EPC Acquisition - Analyst Blog
23 August 2011 - 2:51PM
Zacks
Regal Beloit Corporation (RBC) has closed its
previously announced acquisition of 100% of the stock and assets of
Electrical Products Company ("EPC") from A.O. Smith
Corporation (AOS) for approximately $875 million.
The portion involving EPC’s activities in China was escrowed pending
administrative approvals, which are expected shortly.
In order to get the consent
of acquisition from the U.S. Department of Justice (DoJ), Regal
Beloit agreed to divest its existing U.S. focused pool and spa
motor business, excluding the pool and spa motor business of
EPC.
The company will also
dispose its EPC draft inducer designs, which are under
development.
The DoJ asserted that these
divestures would ease antitrust concerns about higher prices, lower
quality, sub-par customer service and less innovation.
The acquisition, which was
declared last year, was delayed as management was trying to seek
confirmation from the DOJ for the acquisition.
Per the acquisition
agreement, Regal Beloit paid approximately $700 million in cash and
around $175 million worth of shares of Regal Beloit common
stock.
Regal Beloit funded the
acquisition through a senior unsecured notes issue in a private
placement.
Management expects that EPC
will increase revenues by approximately $700 million and will be
EPS-accretive (excluding one-time items) in the first full year
following the acquisition.
Electrical Products is a
leader in the hermetic motor space and with this acquisition Regal
Beloit expects to enter that territory. The acquisition of EPC will
strengthen Regal Beloit’s presence in low-cost manufacturing
locations and provide consolidation opportunities.
Headquartered in Beloit,
Wisconsin, Regal Beloit manufactures mechanical and
electrical motion control and power generation products.
SMITH (AO) CORP (AOS): Free Stock Analysis Report
REGAL BELOIT (RBC): Free Stock Analysis Report
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