Regal-Beloit Acquires GE HIVAC & Capacitor division
"At the Heart of What Drives Your World"
January 3, 2005
- David A. Barta
608-364-8808, ext 106
VP, Chief Financial Officer
- Kenneth F. Kaplan
VP, Treasurer & Secretary
608-364-8808, ext. 104
Completes Acquisition of HVAC/Refrigeration
Motor and Capacitor Operations from General Electric
Beloit, WI - January 3, 2005 - REGAL-BELOIT CORPORATION (AMEX:RBC) today
announced that it has completed the purchase of General Electric Company's
(NYSE:GE) Heating, Ventilation and Air Conditioning (HVAC)/Refrigeration
Motors and Capacitors operations of GE Consumer & Industrial. The
HVAC/Refrigeration Motors and Capacitors operations include a full line of
motors for residential HVAC applications and capacitors for HVAC and high
intensity lighting applications.
The transaction closed at 11:59 pm (EST) on December 31, 2004. The purchase
price was $270 million in cash and the issuance of 4.56 million shares of
the Company's common stock which, based on the closing price on December 31,
2004, results in total consideration of approximately $400 million. The
Company estimates that the future tax benefits related to the deductibility
of goodwill and intangible asset amortization to have an estimated present
value of $45 million to $50 million.
REGAL-BELOIT expects the acquisition to add sales of approximately $500
million in 2005 and, including an estimated $.20 per share of one-time costs
and the impact of related financing activities, to add $.32 to $.34 to 2005
diluted earnings per share.
Key attributes of the acquisition include:
. Aleading market position for electric motors used in central heating and
air conditioning systems.
. Expansion of the Company's customer base to include major HVAC OEMs.
. Patented variable speed motor technology.
. Expansion of the Company's global manufacturing capabilities.
. Use of the trade name "GE HVAC Motors by Regal-Beloit" for a period of up
to 15 years.
James L. Packard, CEO and Chairman of REGAL-BELOIT CORPORATION commented,
"This is a defining acquisition. We believe this acquisition, coupled with
the acquisition of the Commercial AC Motor business we completed in August,
makes us the largest Commercial/Industrial motor producer in the United
States as well as the leader in HVAC motors. Equally important, these
acquisitions bring impressive technology and significant low cost
manufacturing resources to our Company. We are excited about the potential
for these businesses and the outstanding employees that will be joining our
Company. We are particularly pleased to announce that Mark Gliebe, formerly
General Manager of GE Motors & Controls, will also be joining REGAL-BELOIT.
The HVAC/Refrigeration Motors and Capacitors operations are based in Fort
Wayne, Indiana. Included in the sale are motor manufacturing facilities in
Springfield, Missouri; Reynosa, Mexico; and Faridabad, India and a capacitor
manufacturing facility in Juarez, Mexico. The business also has technology
resources located in Hyderabad, India.
The Company financed $270 million of the purchase price through the
amendment and expansion of its bank credit facility. The remainder of the
purchase price was paid to GE in common stock of the Company, based on the
issuance of 4.56 million shares of REGAL-BELOIT common stock in a private
placement. GE entered into a shareholder's agreement with REGAL-BELOIT
related to the common stock issued to GE as part of the transaction. The
shareholder's agreement, among other things, provides GE with the
opportunity to sell its REGAL-BELOIT stock over a defined period and under
The Company will hold a conference call at 1 p.m. CST (2 p.m. EST) on
Thursday, January 6, 2005 to discuss the acquisition. To participate in the
call, investors should call 888-867-5802 at the scheduled time and ask for
the REGAL-BELOIT conference call, passcode 10671623. The call will be
available by digital replay through January 14, 2004 at 877-213-9653,
passcode 10671623. Robert W. Baird & Co. served as the financial advisor to
About REGAL-BELOIT CORPORATION:
REGAL-BELOIT CORPORATION (AMEX:RBC) is a leading manufacturer of mechanical
and electrical motion control and power generation products serving markets
throughout the world.
REGAL-BELOIT is headquartered in Beloit, Wisconsin, and has manufacturing,
sales, and service facilities throughout the United States and Canada, and
in Mexico, Europe and Asia.
For more information, visit the Company's website at
"At the Heart of What Drives Your World"
Cautionary Concerning Forward-Looking Statements
This press release may include certain "forward-looking statements" intended
to qualify for the safeharbors from liability established by the Private
Securities Litigation Reform Act of 1995. Statements other than statements
of historical fact (including, without limitation, statements relating to
the integration and future financial performance of the HVAC/Refrigeration
Motors and Capacitors operations) are considered forward-looking statements.
These statements are based on management's current expectations and are
subject to certain risks and uncertainties which could cause actual results
or outcomes to differ materially from those currently anticipated. Factors
that could affect actual results or outcomes include: unexpected issues and
costs arising from the consolidation of the HVAC/Refrigeration Motors and
Capacitors operations; marketplace acceptance of the acquisition;
unanticipated fluctuations in commodity prices and issues associated with
the Company's ability to pass increased prices on to its customers; and
changes in global political, economic, business, competitive, market and
regulatory factors as detailed in the Company's filings with the Securities
and Exchange Commission. Shareholders, potential investors and others are
urged to consider these factors in evaluating the forward-looking statements
and are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements included herein are made only as
of the date of this press release, and the Company undertakes no obligation
to publicly update such forward-looking statements to reflect subsequent
events or circumstances.
For more information:
Media: Fritz Hollenbach
V.P. Administration & Human Resources
Telephone: 608/364-8808, X107
Financial: Dave Barta
Chief Financial Officer
Telephone: 608/364-8808, X106
200 State Street . Beloit, WI 53511-6254
608-364-8808 . Fax: 608-364-8818