Regal to combine with Rexnord's PMC segment
Regal Beloit Corporation and Rexnord Corporation have reached a definitive agreement where Rexnord will separate its Process & Motion Control segment and combine it with Regal in a Reverse Morris Trust transaction.
Regal shareholders will own 61.4 percent and Rexnord shareholders will own 38.6 percent of the combined entity, before a potential dividend to Regal shareholders and a corresponding ownership adjustment to Rexnord shareholders, sized at closing to ensure that RMT ownership requirements are met. Rexnord shareholders will continue to own 100 percent of the businesses' Water Management platform.
With the addition of PMC, Regal's 2020 pro forma revenue was approximately $4.1 billion with adjusted EBITDA of $740 million, excluding $120 million in annualized cost synergies expected to be achieved by year three after closing.
The transaction combines Regal and PMC's best-in-class power transmission portfolios to drive innovation in industrial power transmission and motion control solutions through superior engineering, technology, and manufacturing capabilities. PMC is a world-class provider of specialized, highly-engineered power transmission components and solutions, with a strong portfolio of Industrial Internet of Things solutions. The transaction expands Regal's portfolio, customer reach, and product diversity while creating shareholder value through enhanced growth and substantial cost synergies.
"This transformative combination brings together two highly complementary businesses, creating a premier provider of power transmission products, poised to deliver enhanced value for our customers, associates, and shareholders," said Louis Pinkham, Regal CEO. "Combining with PMC accelerates our transformation momentum and is an important step towards our vision to accelerate profitable growth. We believe this transaction will create meaningful value for customers by providing comprehensive solutions across the entire industrial drive train, increased portfolio and reach, and an enhanced presence in diverse and attractive end markets and geographies. Shareholders will benefit from compelling value creation and financial benefits, including enhanced growth, cost synergy-driven margin expansion, attractive ROIC, and earnings accretion."
"We have long admired PMC's products and capabilities, highly-regarded brands, and talented team. Importantly, Regal and PMC are a terrific cultural fit with a shared commitment to integrity, customer success, continuous improvement, and a passion to win. We are confident these shared values and complementary business structures will help facilitate a seamless transition and fuel our continued success."
Pinkham will lead the combined corporate entity, which will continue to be headquartered in Beloit, Wisconsin.
Todd Adams, chairman, president and CEO of Rexnord, commented, "This transaction provides clear and compelling value for Rexnord shareholders through ownership in a combined company with enhanced scale and significant growth opportunities. Regal is committed to investing in the continued growth of its power transmission business, and we are confident the PMC platform and team are a perfect fit to accelerate their strategy. Rexnord's Water Management business will be well-positioned to continue to drive differentiated growth as a standalone business aligned around its distinct competitive advantages and market dynamics."
INDUSTRIAL SUPPLY MAGAZINE
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