Baldor to buy Rockwell Automation division

Industrial Distribution staff -- Industrial Distribution, 11/7/2006 1:20:00 PM

Baldor Electric Co. has agreed to purchase the power systems business of Rockwell Automation Inc. for $1.8 billion, in a deal expected to close in early 2007.

Fort Smith, Ark.-based Baldor, a manufacturer of electric motors, drives and generators, said that it will pay $1.75 billion in cash and about $50 million in stock for the Rockwell unit, which sells its products under the Reliance Electric and Dodge brand names.

In June, Rockwell said it planned to sell the business, which makes electric motors used in conveyor belts and similar industrial systems and the bearings and gears used to transmit mechanical power through factories, mines and oil operations.

For Baldor, the purchase means about $1 billion in higher margin revenues, a manufacturing base in China and the extension of its product line into power transmission products and larger motors. The deal also increases Baldor’s manufacturing capabilities and flexibility, and broadens investor interest in the company.

Baldor’s president and CEO John McFarland said the Reliance and Dodge businesses complement his company’s existing businesses.

“Dodge products have been available for over 125 years, Reliance motors for over 100 years and Baldor motors for over 85 years. These companies have a long history of customer preference and good profitability,” McFarland said. “This is a unique opportunity to build a stronger company for our customers, our employees and our shareholders.”

Baldor, which has roughly 3,900 employees worldwide working in 14 manufacturing plants, had revenues of $721 million last year.

Rockwell’s Power Systems has approximately 4,300 employees worldwide and 14 manufacturing facilities.