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Home » Rockwell unloads Dodge/Reliance brands

Rockwell unloads Dodge/Reliance brands

ControlGlobal.com
11/22/2006

In a $1.8 billion exchange of cash and common stock, Rockwell Automation has agreed to turn over its Dodge mechanical and Reliance Electric motor and motor repair services to Baldor Electric. The deal is expected to close during the first quarter of next year.

The two brands have been on the block since June. Rockwell said then it planned to sell the businesses, which make electric motors used in conveyor belts and similar industrial systems and the bearings and gears used to transmit mechanical power through factories, mines and oil operations.

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Keith Nosbusch

Keith Nosbusch, Rockwell Automation chairman and CEO, says Baldor and its two new acquisitions, Dodge and Reliance Electric, are “compelling cultural and strategic fits.”


A spokesman for Baldor says the purchase means his company gets about $1 billion in higher margin revenues, a manufacturing base in China and the extension of its product line into power transmission products and larger motors. The deal also increases Baldor’s manufacturing capabilities.

Reliance and Dodge are complementary businesses to Baldor’s existing operations in electric motors, drives and generator manufacturing, says president and CEO John McFarland.

“There is a compelling cultural and strategic fit between Baldor and our Reliance and Dodge businesses,” adds Keith Nosbusch, Rockwell Automation’s chairman and CEO.

“Both organizations have similar operating philosophies and are committed to treating employees with respect, delivering high-quality products and providing excellent service to our customers. Power Systems will benefit significantly from ownership dedicated to investing on a global basis to create a leading motors and power transmission business.”

Rockwell Automation said it would use some of the proceeds for dividends or share buybacks and the rest to fuel growth.

The deal brought Rockwell back into the good graces of Wall Street, where it has taken some knocks lately. Rockwell shares gained $1.90, to $63.20. Baldor rose $2.24, to $33.25, a gain of more than 7 percent on the day of the sale.

“There was a lot of noise around the company’s inability to get the deal done at targeted levels, and today’s announcement should put these concerns to rest,” an analyst at J. P. Morgan, Stephen Tusa, said in a research note. Mr. Tusa also said the value was higher than he had foreseen.

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