RBC Bearings has entered into a definitive agreement to acquire the Dodge mechanical power transmission division of Asea Brown Boveri (ABB) for US$2.9bn in cash.
With headquarters in Greenville, South Carolina, Dodge is a manufacturer of mounted bearings and mechanical products.
Dodge produces a complete line of mounted bearings, enclosed gearing and power transmission components across a set of industrial end markets. It primarily operates across the construction and mining aftermarket, food & beverage, warehousing and general machinery verticals, with sales predominately in the Americas.
Dodge generated revenue of around US$617m and adjusted EBITDA of approximately US$174m, representing an adjusted EBITDA margin of 28% for the 12 months ended June 30, 2021.
“We are very pleased to announce the execution of an agreement between ABB and RBC Bearings to acquire Dodge,” said RBC Bearings chairman, president and CEO, Michael Hartnett.
“The combination will enhance RBC Bearings’ capabilities, footprint and customer base while increasing our access 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 organisation.
“The combined company will have an attractive position in the Aerospace, Defense and Industrial markets with a diversified client base and expansive geographic footprint.”
The acquisition is anticipated to be immediately accretive to RBC Bearings’ cash EPS (excluding amortization of intangibles, deferred financing fees, and one-time deal costs associated with this transaction) by around 40% to 60% in the first full fiscal year after close.
The acquisition is expected to generate annual pre-tax run-rate synergies of approximately US$70m to US$100m by fiscal year, 2026.
The transaction is expected to close in the fourth calendar quarter of 2021 (RBC’s fiscal 2022 third quarter), subject to customary closing conditions, including regulatory review.