In the second blockbuster motor deal in just two weeks, A.O. Smith Corp. (AOS), Milwaukee, announced plans to sell its Electrical Products Co., one of the largest manufacturers of electric motors for residential and commercial applications in North America, to Regal Beloit Corp. (RBC), Beloit, Wis., for approximately $875 million. The transaction, which has been approved by both companies' boards of directors, is expected to close in the first half of 2011.
In a press statement on the sale, A.O. Smith Chairman and CEO Paul 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.”
A press release on Regal Beloit's website said four key reasons for its acquisition of the A.O. Smith business were its complementary product portfolio; technology for variable-speed hermetic applications; a patent portfolio with nearly 150 patents; and the expansion of the company's global manufacturing capabilities. 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. This business unit reported sales of $1.1 billion for the first nine months of 2010.
Until ABB's recent acquisition of Baldor Electric Co., another motor giant, the energy-saving capabilities of the latest lighting systems have gotten more press in the green market than energy-efficient motors, even though they also have a proven track record in slashing facilities' utility bills and attract millions of dollars in utility rebates.