MILWAUKEE, Dec. 13, 2010 /PRNewswire-FirstCall/ -- A. O.
Smith Corporation (NYSE: AOS) announced today 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
Corporation (NYSE: RBC) 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.
"This transaction is strong evidence of our Electrical Products
team's success at structuring and operating this business to
maximize profitability, even during the recently difficult market
environment. Four years ago, they identified a roadmap for
improvement, diligently stuck to that roadmap, and re-emerged as a
much stronger business with substantially higher operating
margins," Jones said.
With the sale of its electrical products business, A. O. Smith
Corporation'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.
Commenting on the use of proceeds from the proposed sale of its
electrical products business, Jones said, "We intend to use these
proceeds to explore opportunities in high growth markets and
expansion into new geographies and adjacent technologies that
complement our manufacturing, engineering, and distribution
strengths, with an emphasis on water-related technologies."
Regal Beloit Corporation, headquartered in Beloit, Wis., is a leading manufacturer of
mechanical and electrical motion control and power generation
products serving markets throughout the world. Regal Beloit
has manufacturing, sales, and service facilities throughout
the United States, Canada, Mexico, Europe, and Asia.
A. O. Smith Electrical Products Company manufactures an
extensive line of fractional horsepower, integral horsepower, and
hermetic motors for residential and commercial applications.
For the first nine months of 2010, the division reported
operating earnings of $61.9 million
on sales of $539.4 million.
Headquartered in Tipp City, Ohio,
the electric motor division employs approximately 7,800 people at
20 manufacturing plants in the United
States, Mexico,
China, and England. The division also has
distribution centers in the United
States and sales/distribution offices in Singapore and Dubai.
The sale is conditioned upon customary terms and conditions as
well as the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and other governmental approvals. The two parties expect
to close on the transaction in the first half of 2011. There
are no financing conditions to the transaction.
Greenhill & Co. acted as financial advisor to A. O. Smith. Latham & Watkins LLP
acted as counsel to the company.
A. O. Smith will broadcast a live
conference call to discuss the transaction at 11:00 a.m. (Eastern Standard Time) on
Monday, Dec. 13, 2010. The call
can be heard on the company's web site, www.aosmith.com. An
audio replay of the call will be available on the company's web
site after the live event.
Forward-looking statements
This release contains statements that the company believes are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally can be identified by the use of words such as
"may," "will," "expect," "intend," "estimate," "anticipate,"
"believe," "forecast," "guidance" or words of similar meaning.
These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those anticipated as of the date of this release. Actual
results may differ materially from those expressed or implied in
such statements. Important factors that could cause actual
results to differ materially from these expectations include, among
other things, the following: the failure to receive, on a timely
basis or otherwise, the required approvals from the government or
regulatory agencies (including the terms of such approvals); and
the risk that a condition to closing of the sale may not be
satisfied. Forward-looking statements included in this press
release are made only as of the date of this release, and the
company is under no obligation to update these statements to
reflect subsequent events or circumstances. All subsequent
written and oral forward-looking statements attributed to the
company, or persons acting on its behalf, are qualified entirely by
these cautionary statements.
A. O. Smith Corporation, with headquarters in Milwaukee, Wis., is a global leader applying
innovative technology and energy-efficient solutions to products
marketed worldwide. The company is one of the world's leading
manufacturers of residential and commercial water heating
equipment, offering a comprehensive product line featuring the
best-known brands in North America
and China.
SOURCE A. O. Smith Corporation