ABB Ltd., the world’s largest maker of power-distribution equipment, agreed to buy Thomas & Betts Corp. for $3.9 billion to expand its North American offerings of low voltage equipment.
ABB offered $72 for each share of Memphis, Tennessee-based Thomas & Betts, the Zurich-based company said in a statement today. That’s 24 percent more than the the close on Jan. 27. ABB is paying cash for the target, and said the deal will be accretive within the first year after closing.
Thomas & Betts marks the second major acquisition for ABB under Chief Executive Officer Joe Hogan, who joined in 2008 from General Electric Co. He bolstered ABB in the U.S. with the January 2011 purchase of Baldor Electric Co. for $3.1 billion. That deal added industrial motors and drives and gave ABB heft in automation, where it competes with Siemens AG.
“Because our products are complementary, we’ll go to market with one of the broadest offerings in the industry,” Hogan said in the statement. “Strategically, it’s a great fit.”
ABB said it plans to reap $200 million in annual synergies from the purchase by 2016, mainly from sourcing and purchasing. Thomas & Betts Chief Executive Officer Dominic J. Pileggi will be in charge of a new global business unit, ABB said.
Thomas & Betts was founded in 1898 as a sales agency for electrical wires and raceways, and its products are used in the telecommunications, construction and power utility industries. Now it makes cable ties, connectors and steel boxes that house electrical wiring, with 9,400 people generating revenue of about $2.3 billion last year.
Hogan has made the Americas one of his main regions in which to pursue growth in power systems, discrete automation and low-voltage products. By 2015, ABB wants to generate as much as 30 percent of revenue from the region, compared with 19 percent in 2010. The company has said that it will continue to focus on power and automation and doesn’t intend to divest assets.
ABB has said purchases may boost annual sales growth by as much as 4 percent until 2015. For Thomas & Betts, ABB has set up a $4 billion financing commitment from Bank of America Merrill Lynch, which will be repaid through a combination of cash and the issuance of debt, it said.
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