Regal Rexnord to acquire Altra Industrial Motion in $4.9bn deal

Regal Rexnord, a US-based electric motors and power transmission components manufacturer, has agreed to acquire Altra Industrial Motion, in an all-cash transaction valued at $4.95 billion.

Based in Braintree, Massachusetts, Altra Industrial Motion designs and manufactures engineered motion control, automation, and power transmission solutions.

Under the terms of the deal, shareholders of the NASDAQ-listed Altra Industrial Motion will be paid $62 per share. The offered price is a 54% premium to the closing price of Altra Industrial Motion’s common stock on 26 October 2022.

Carl Christenson — Altra Industrial Motion Chairman and CEO said: “The sale of Altra to Regal Rexnord will provide our shareholders with immediate and substantial cash value, as well as a compelling premium, and the Board of Directors has agreed that this transaction is in the best interests of our shareholders.

“I am extremely proud of the company we have built and I am excited to announce this new chapter for Altra, knowing that the company will have a great home within the Regal Rexnord organization.”

Altra Industrial Motion to be acquired by Regal Rexnord. Photo courtesy of Krotz/Wikipedia.org.

With the acquisition, Regal Rexnord is expected to enhance the portfolio, product diversity, and customer reach of Regal Rexnord apart from the creation of shareholder value.

Regal Rexnord with the acquisition of Altra Industrial Motion anticipates 2022 pro forma revenue of approximately $7.2 billion, adjusted EBITDA of approximately $1.5 billion, and an adjusted EBITDA margin of approximately 21%.

Based on the growth and margin outlook for the combined entity, and with the inclusion of $160 million in run rate cost synergies each year, Regal Rexnord will target 2025 pro forma revenue of approximately $8.3 billion, 2025 Adjusted EBITDA of approximately $2.1 billion, and an adjusted EBITDA margin of more than 25%.

Louis Pinkham — Regal Rexnord CEO said: “This acquisition opens up many new avenues for profitable growth.

“In particular, Altra’s Automation & Specialty platform transforms our existing automation portfolio – namely ModSort and Automation Solutions (formerly Arrowhead) – into a meaningful, global automation solutions provider.

“The transaction also significantly enhances our power transmission portfolio, in particular our industrial powertrain offering, by adding complementary products in brakes, gears, and clutches, while extending the number of end markets in which we actively participate.”

Expected to close in H1 2023, the deal is subject to regulatory approvals, Altra Industrial Motion shareholder approval, and the satisfaction of other customary closing conditions.