ABB has signed on to transfer its Mechanical Power Transmission division (Dodge) to RBC Bearings Incorporated (Nasdaq: ROLL) for $2,9 billion in cash. This process will create a new leader in the manufacture of highly engineered and performance-critical bearings and motion control components. The process is expected to be completed by the end of 2021.
Dodge has pioneered the design, manufacture and marketing of mounted bearings, enclosed gears and power transmission components for over 140 years. Selling to industries such as open pit mining, aggregates and cement, storage, food and beverage, the business offers the broadest mechanical power transmission portfolios on the market.
Dodge, which has approximately 1.500 employees worldwide, generated approximately 2020 million dollars in revenue in the June 2021-600 period, while more than 90 percent of this income was obtained in the USA. The EBITDA margin was approximately 23 percent. The company is headquartered in Greenville, South Carolina, with production at six facilities, five in the USA and one in China. The head of the department is Roger Costa.
Björn Rosengren, CEO of ABB: “We are delighted that Dodge will continue its stunning growth performance at its new home, RBC Bearings. This transaction will further strengthen ABB's balance sheet. As part of our capital allocation priorities, we will primarily use the proceeds from the transaction to finance organic growth, sustainably increase dividend payouts per share, and make value-added purchases. We will also inform you of our plans for the Turbocharger launch and the possible sale of our E-Mobility division when the time comes.”
RBC Bearings President and CEO Dr. Michael J. Hartnett: “We are pleased to announce that an agreement has been reached between ABB and RBC Bearings for the acquisition of Dodge. With this combination, we will have the opportunity to get to know Dodge's attractive end markets while strengthening RBC Bearings' capabilities, footprint and customer reach. With Dodge's new products and end markets, our businesses will ideally complement each other. The resulting combination will achieve an attractive position in the Aerospace, Defense and Industrial markets, while bringing with it an extensive customer base and broad geographic footprint. We look forward to seeing Dodge's talented team at RBC Bearings.”
ABB predicts a pre-tax non-operating book profit of approximately $2,2 billion from the sale of Dodge. ABB also expects cash tax relief on the transfer to amount to approximately $400 million.
Within the scope of the process, JP Morgan exclusively provides financial advice, while Kirkland & Ellis LLP provides legal advice to ABB.