Home » Regal-Beloit to purchase GE's HVAC motors business
Regal-Beloit to purchase GE's HVAC motors business
November 22, 2004
Regal-Beloit Corporation,Beloit, WI, has agreed to acquire the Heating, Ventilation and Air Conditioning (HVAC)/Refrigeration Motors and Capacitors operations of GE Consumer and Industrial from General Electric Company for $379 million. GE's HVAC/Refrigeration Motors and Capacitors operations include a full line of motors for residential HVAC applications and capacitors for HVAC and high intensity lighting applications.
The HVAC/Refrigeration Motors and Capacitors operations are based in Fort Wayne, IN. Included in the sale are motor manufacturing facilities in Springfield, MO; Reynosa, Mexico; and Faridabad, India and a capacitor manufacturing facility in Juarez, Mexico. The business also has technology resources located in Hyderabad, India. Regal-Beloit expects the acquired business to add approximately $520 million of sales in 2005.
"We are tremendously excited to announce this acquisition, said James L. Packard, CEO and chairman of Regal-Beloit. "The acquisition of GE's HVAC/Refrigeration Motor and Capacitor operations is another significant step in our strategy to expand our end markets and product offering. Additionally, the acquisition adds four outstanding facilities to our manufacturing footprint and continues our strategy to expand our manufacturing capabilities on a global basis. We are also excited about the potential for the leading edge ECM technology that is a part of this transaction."
The purchase price for the acquisition will be paid through a combination of cash and equity. The company expects to finance $270 million of the purchase price through the expansion of its current bank credit facility. To fund the cash portion of the purchase price, the company has received a commitment from Bank of America for a $475 million senior credit facility consisting of a revolving credit line. The remaining $109 million is expected to be paid to GE in common stock of the company, based on the issuance of 4.56 million shares of Regal-Beloit common stock in a private placement.
As a condition to closing, GE will enter into a shareholders agreement with Regal-Beloit related to the common stock issued to GE as part of the transaction. The shareholders agreement, among other things, will provide GE with the opportunity to sell its Regal-Beloit stock over a defined period and under certain circumstances. Upon completion of the acquisition and related financing activities, the company expects that its principal leverage statistics will be consistent with current levels. The present value of the future tax benefits related to the deductibility of goodwill and intangible asset amortization is estimated at $45 million to $50 million.
Robert W. Baird & Co. served as the financial advisor to REGAL-BELOIT. Bank of America is serving as REGAL-BELOIT'S lead bank.