The operations being sold represent about 70% of the sales of Tecumseh’s electrical components business. When the company bought Fasco from Invensys in 2002, Tecumseh’s chief executive at the time, Todd Herrick, saw the acquisition as a "key step" in revitalising the growth of the company.

But last year, Tecumseh lost $80m and the current president and chief operating officer James Bonsall says that the sale to Regal Beloit "is another important step in our ongoing efforts to reduce the company’s debt, sharpen its strategic focus, and improve its financial performance".

For Regal Beloit, which focuses on electrical and mechanical motion control and power generation products, the acquisition provides additional manufacturing sites in the US, Mexico, Thailand and Australia. The company expects the acquisition to add around $290m worth of sales during 2008.

"Fasco is a great business with a long history of product and manufacturing excellence," says Regal Beloit’s chairman and chief executive, Henry Knueppel. "This acquisition is consistent with our strategy to expand our end markets and integrated product solutions.

"We are particularly pleased that this acquisition would allow us to offer customers a range of complete motor and blower system solutions," Knueppel adds. "Additionally, the acquisition would continue the expansion of our global manufacturing and commercial footprints and extend our reach further into Asia, including the Australian market."

The deal is expected to close in the third quarter of 2007, subject to regulatory approvals.