Emerson To Sell Power Transmission Solutions Unit To Regal Beloit For $1.44 Bln

(RTTNews) - Diversified technology company Emerson Electric Co. (EMR) agreed Monday to sell its Power Transmission Solutions business to power generation products manufacturer Regal Beloit Corp. (RBC) in an all-cash deal valued $1.44 billion, including $40 million of certain postretirement liabilities.

The deal, subject to regulatory approvals, is expected to close in the first calendar quarter of 2015 However, the closure of the deal is not subject to shareholder approvals.

"PTS brings complementary products and well-known brands, but more importantly a very talented team who are experts in their markets as well as very strong operators. We are excited to have PTS as part of the Regal family and we look forward to growing with them in our future," Regal Beloit Chairman and CEO Mark Gliebe said in a statement.

St. Louis, Missouri-based Emerson said it will use the proceeds from the sale for incremental share repurchase in fiscal 2015. The company noted that it will work closely with Regal Beloit to ensure a smooth transition for customers and employees.

Separately, Regal Beloit noted that the deal will broaden its portfolio, diversify its end market exposure and strengthen its global footprint. The company added that the deal is expected to add to its earnings and margins in 2015.

Regal Beloit projects 2015 accretion in a range of $0.40 to $0.60 per share, including purchase accounting adjustments and closing costs. It also expects 2016 accretion in the range of $0.95 to $1.15 per share.

The company also anticipates that the deal will generate synergies of $30 million within a four year period.

Regal Beloit revealed that the acquired business will become part of its newly-defined Power Transmission segment.

"While the Power Transmission Solutions business no longer aligns with the strategic direction of our portfolio, it is a strong business with an outstanding management team that has created significant value while part of Emerson. This transaction allows us to better focus on our value creation priorities and provides Regal Beloit with a unique opportunity to strengthen and grow its mechanical power transmission segment," Emerson Chairman and CEO David Farr stated.

Florence, Kentucky-based Power Transmission Solutions unit highly engineered power transmission products and solutions and is part of Emerson's Industrial Automation segment. The unit generated 2014 revenues of more than $600 million, and employs over 3,000 people across the globe.

The business makes couplings, bearings, conveying components, gearing, drive components, and supporting services and solutions, with brands including Browning, Jaure, Kop-Flex, McGill, Morse, Rollway, SealMaster, and System Plast.

Emerson had in late June said it is evaluating strategic options for the business unit, and was expected announce the plans for the business by the end of 2014.

Emerson has been continually evaluating the mix and competitive positioning of its businesses to maximize shareholder value, which may include adding or selling operations. It agreed to sell its Connectivity Solutions business unit to Bel Fuse, Inc. (BELF.A, BELF.B) in a deal valued at $98 million in mid-May.

EMR closed Friday's regular trading session at $58.43, down $1.97 on a volume of 8.18 million shares.