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Regal Beloit to Acquire Emerson Business for $1.4B - Analyst Blog

Regal Beloit Corporation ( RBC ) recently inked a definitive agreement to acquire the Power Transmission Solutions business (PTS) of Emerson Electric Co. ( EMR ), a premier provider of innovative solutions for customers in industrial, commercial and consumer markets, for approximately $1.4 billion. The acquisition is expected to close by first-quarter 2015.

The proceeds from the divestiture will be used by Emerson for incremental share repurchase in fiscal 2015. Emerson intends to offload this non-core business as it no longer aligns with the company's portfolio. With revenues of $600 million in 2014, PTS is a global leader in highly engineered power transmission products and solutions.

Post-acquisition, PTS will become part of Regal Beloit's newly-defined Power Transmission segment. Along with its products and services, PTS brings with it an exceptional management team and brand recognition.

This acquisition provides Regal Beloit with an opportunity to grow its mechanical power transmission segment by broadening its portfolio and strengthening its global footprint. Regal Beloit expects the transaction to be accretive to earnings and margins going forward. It expects the transaction to be accretive in 2015 with earnings in the range of 40 cents and 60 cents per share and 2016 accretion between 95 cents and $1.15 per share.

The deal is expected to generate $30 million in annual savings within four years. Regal Beloit continues with its growth trajectory through strategic acquisitions and has expanded technologically and geographically on the back of its aggressive acquisition policy.

Regal Beloit is a leading manufacturer of electrical and mechanical motion control products. The company offers a wide array of stock model and customized electric motors, blowers, electric generators, transfer switches, switchgear, valves, gearboxes, power generation components and controls.

Regal Beloit currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look include Pioneer Power Solutions, Inc. ( PPSI ) carrying a Zacks Rank #1 (Strong Buy), and AO Smith Corp ( AOS ) carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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