Two Wisconsin-based industrial parts makers, Regal Beloit and Rexnord, are merging their power transmission businesses with a view to accelerating R&D and digital service capabilities, developing world-class IIoT solutions and extracting cost synergies to drive long-term value creation.
The transaction values Rexnord’s process & motion control business at $3.7bn or 14.2x adjusted EBITDA.
While Rexnord makes heavy duty mechanical components like couplings and bearings for customers in the automotive, mining and energy sectors, Regal Beloit services lighter use cases, including industrial power transmission and power generation components including electric motors.
This combination of complementary portfolios will create a power transmission giant with a product portfolio spanning the entire drive train. Not only will this accelerate R&D and open new avenues for growth, but as Acuity Partner Andy Lister points out, the deal will unlock opportunities to employ the latest analytics tools for decision-making:
“This deal highlights that technology is at the core of even the most industrial of M&A transactions” said Lister. “As well as the usual merger benefits, Regal makes it clear that providing full digital coverage of the customer lifecycle, using augmented reality to provide real-time insights and leveraging predictive analytics to provide prognostic action are key deal drivers” said Lister.
When the transaction closes in the fourth quarter of 2021, the combined business will be led by its existing board with two new directors from Rexnord.
Meanwhile, Rexnord will refocus as a pure-play Water Management business, with the goal of leveraging its portfolio of IoT-connected products to becoming the leading provider of smart water solutions.
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