RBC RBC Bearings Incorporated

Regal Beloit Corporation (RBC) recently entered into an agreement to sell the assets of the Richmond Gear division to Midwest Truck and Auto Parts, Inc. for an undisclosed amount.

Located in Liberty, South Carolina, Richmond Gear manufactures and distributes ring & pinions, transmissions and traction control devices for the Racing, Hi-Performance and Off-Road aftermarkets. Meanwhile, Regal will also sell Powertrax and Lock-Right product lines to Midwest.

Headquartered in Chicago, Illinois, Midwest Truck & Auto Parts, Inc., globally sources and supplies a wide variety of components to the Heavy Duty, Light Duty and Hi-Performance aftermarkets.

Regal Beloit Corporation (RBC) is a manufacturer and marketer of branded mechanical and electrical motion control and power generation products serving markets worldwide.  The company has established manufacturing, sales, and service facilities throughout the U.S., Canada, Mexico, Europe, and Asia.

On August 22, 2011, Regal Beloit has closed its previously announced acquisition of 100% of the stock and assets of Electrical Products Company from A.O. Smith Corporation for approximately $875 million.

According to the acquisition agreement, Regal Beloit paid approximately $700 million in cash and around $175 million worth of shares of Regal Beloit common stock.

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

The acquisition integrations, including the latest EPC acquisition are supposed to be accretive and drive more growth in the long run.

The company’s long-term growth strategy is driven by organic growth through innovation of new products, expansion of customer base, exploiting new opportunities at existing customers and extending activities to fast growing geographic markets.  The pricing strategies and production techniques which helped in controlling the cost inflation and securing the margin growth are also taken into account.

We have a Neutral recommendation on Regal Beloit Corporation. Our recommendation is supported by Zacks #3 Rank which translates into a short-term rating of Hold.

 
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