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ABB sells Dodge to RBC for $2.9bn, doubling its size

26 July, 2021

UPDATED: ABB is selling its Dodge mechanical power transmission business to the US bearings-maker RBC Bearings for $2.9bn in cash. The deal will double RBC’s revenues, and create a leading manufacturer of highly-engineered, performance critical bearings and motion control components, with customers including OEMs and the industrial aftermarket.

Dodge, whose headquarters are in Greenville, South Carolina, manufactures mounted bearings, enclosed gearing and power transmission components for a wide range of industrial end-markets. It has around 1,500 employees worldwide and has six manufacturing sites – five in the US and one in China. In the year ending June 30, 2021, it achieved revenues of about $617m and an EBITDA of about $174m. More than 90% of its revenues are generated in the Americas.

ABB's CEO Björn Rosengren announced last November that the company was planning to sell Dodge, which it acquired in 2011 when it bought Baldor Electric for $4.2bn, as well as planning to dispose of its Turbocharging and Power Conversion divisions. The three operations had combined annual revenues of around $1.75bn, or about 6% of ABB’s total revenues.

RBC Bearings predicts that synergies from the Dodge acquisition could reach $70-100m a year within five years. Its chairman, president and CEO, Dr Michael Hartnett, says that the addition of Dodge “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, defence and industrial markets, with a diversified client base and expansive geographic footprint.”

ABB is expecting a non-operational pre-tax book gain of around $2.2bn from the sale of Dodge. The transaction-related cash tax outflows will be around $400m.

“We are delighted that Dodge has found an excellent new home with RBC Bearings, where it can continue its exciting growth story,” says Rosengren. “This transaction further strengthens ABB’s balance sheet. In line with our capital allocation priorities, we plan to first use the proceeds from the transaction to fund organic growth, pay a rising sustainable dividend per share and make value-creating acquisitions. Furthermore, we will give an update on our plans for the Turbocharging exit and possible listing of our E-Mobility division in due course.”

RBC, whose headquarters are in Oxford, Connecticut, manufactures precision bearings and other mechanical products, with its main focus currently being on technical, regulated and engineered products for specialised markets requiring sophisticated design, testing and manufacturing capabilities. Its portfolio includes ball and roller bearings and gears for industrial applications, as well as specialised products for the aerospace market.

The Dodge portfolio includes pillow block bearings

In recent years, RBC has broadened its markets, products, customer base and geographic reach, and currently has 43 facilities in seven countries, 31 of which are manufacturing plants.

The sale is expected to close by the end of this year.

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