ABB, the world’s largest maker of power-distribution equipment, agreed to buy Memphis, Tennessee-based Thomas & Betts Corp. for $3.9 billion to expand its North American offerings of low voltage equipment.
ABB is paying $72 per share in cash for Thomas & Betts – 24% higher than Friday's closing price on the New York Stock Exchange. Thomas & Betts employs 9,400 people, generating more than $2.3 billion in revenue last year.
Thomas & Betts marks the second major acquisition for Zurich-based ABB under Chief Executive Officer Joe Hogan, who joined the company in 2008 from General Electric. He bolstered ABB's market position in the U.S. with the January 2011 purchase of motor giant Baldor Electric for $3.1 billion. That deal added industrial motors and drives and gave ABB heft in automation, where it competes with Siemens.
“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 annually from the purchase by 2016, mainly from sourcing and purchasing. Thomas & Betts CEO Dominic Pileggi will be in charge of the new global business unit, ABB said.
Thomas & Betts was founded in New Jersey in 1898, as a sales agency for electrical wire and raceway. It now makes cable ties, electrical fittings and steel outlet boxes used in the electrical, telecommunications, construction and utility industries.
ABB has said the Thomas & Betts purchase may boost annual sales growth by as much as 4 percent until 2015.
By 2015, ABB wants to generate as much as 30 percent of revenue from the region, compared with 19 percent in 2010.
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 does not intend to divest assets.
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