By Michael Calia
Emerson Electric Co. said Monday that it has reached a deal to
sell its power-transmission solutions business to Regal-Beloit
Corp. for $1.4 billion in cash.
The Wall Street Journal had reported last week that the two
companies were near a deal. Emerson had started considering
strategic options for the business, which generated more than $600
million in revenue during 2014, earlier this year.
Emerson said it would use the proceeds for an incremental share
buyback during its fiscal 2015.
The deal represents a relatively large move for Regal-Beloit,
which has a market capitalization of more than $3 billion. By
comparison, Emerson Electric's is pegged at more than $40
billion.
Regal-Beloit, which confirmed the deal in a separate news
release Monday morning, said it expects the transaction to be
accretive to earnings and margins next year, with greater earnings
coming in 2016.
Regal-Beloit makes an array of electrical products, such as
motors and generators, as well as parts used in X-ray machines and
elevators. The Emerson Electric power-transmission business,
meanwhile, makes drive components, couplings and several other
products for use in the automotive, industrial and aeronautic
sectors.
The transaction is expected to close in the first quarter of
2015.
Write to Michael Calia at michael.calia@wsj.com
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