USA – ABB has announced it has signed a definitive agreement to divest its Mechanical Power Transmission division (Dodge) to RBC Bearings Incorporated (RBC) for $2.9 billion in cash.

The transaction is expected to be completed by the end of 2021, subject to customary closing conditions, including regulatory review, ABB said in a press release.

RBC Bearings Incorporated is an international manufacturer and marketer of engineered precision bearings and components. Founded in 1919, the company is headquartered in Oxford, Connecticut.

ABB’s Dodge business has been providing a portfolio of mechanical power transmission solutions for more than 140 years.

Dodge has roughly 1,500 employees worldwide and achieved revenues of approximately $600 million for the last twelve months ending June 30, 2021, of which more than 90% were generated in the Americas. The operating EBITA margin was approximately 23%. The division has six manufacturing sites, five in the U.S. and one in China, with the headquarters located in Greenville, South Carolina. The president of the division is Roger Costa.

“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. “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. Furthermore, we will give an update on our plans for the Turbocharging exit and possible listing of our E-Mobility division in due course.”

“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 access while increasing our exposure 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,” said RBC Bearings Chairman, President and Chief Executive Officer, Dr. Michael J. Hartnett. “We look forward to welcoming Dodge’s talented team to RBC Bearings.”

ABB 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, the company said in a press release.

Source: ABB