RBC Bearings Incorporated, an international manufacturer of highly-engineered precision bearings and components for the industrial, defence and aerospace industries, has entered into a definitive agreement to acquire the DODGE mechanical power transmission division (“DODGE”) of the Swiss ABB Group.
The $2.9 billion cash deal is for the South Carolina-based DODGE, a manufacturer of mounted bearings and mechanical products. DODGE manufactures a complete line of mounted bearings, enclosed gearing and power transmission components across a set of industrial end markets, primarily operating across the construction and mining aftermarket, food & beverage, warehousing and general machinery verticals, with sales predominately in the Americas.
“We are delighted that DODGE has found an excellent new home with RBC Bearings, where it can continue its exciting growth story”, said ABB CEO Björn Rosengren. “This transaction further strengthens ABB’s balance sheet. In line with our capital allocation priorities, we plan to first use the proceeds from the transaction to fund organic growth, pay a rising sustainable dividend per share and make value-creating acquisitions”.
The acquisition is anticipated to be immediately accretive to RBC Bearings’ cash EPS (excluding amortization of intangibles, deferred financing fees, and one-time deal costs associated with this transaction) by approximately 40% to 60% in the first full fiscal year after close. DODGE generated revenue of approximately $617 million and adjusted EBITDA of approximately $174 million, representing an adjusted EBITDA margin of 28%, for the 12 months ended June 30, 2021.
ABB, on the other hand, expects to book a non-operational pre-tax book gain of approximately $2.2 billion on the sale of DODGE. ABB also expects the transaction-related cash tax outflows to be approximately $400 million.
RBC Bearings Chairman, President and Chief Executive Officer, Dr Michael J. Hartnett, said, “Today we are very pleased to announce the execution of an agreement between ABB and RBC Bearings to acquire DODGE. The combination will enhance RBC Bearings’ capabilities, footprint, and customer base while increasing our access to DODGE’s attractive end markets.
“Our businesses are highly complementary, with DODGE bringing new offerings, new end markets, and more scale to the combined organization. The combined company will have an attractive position in the Aerospace, Defense and Industrial markets with a diversified client base and expansive geographic footprint. We look forward to welcoming DODGE’s talented team to RBC Bearings”.
J.P. Morgan is acting as exclusive financial adviser and Kirkland & Ellis LLP is serving as legal counsel to ABB on the transaction.
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