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WEG buys Regal Rexnord’s motors businesses for $400m

26 September, 2023

The Brazilian motor-maker WEG is buying the industrial motors and generators businesses that make up the majority of Regal Rexnord Industrial Systems segment for $400m.

This deal focuses on Regal Rexnord’s Marathon, Cemp and Rotor brands. Under the deal, WEG will integrate around 2,800 people working in 10 factories in seven countries (the US, Mexico, China, India, Italy, Netherlands and Canada) and commercial branches in 11 countries. These businesses had an operating revenue of $541.5m in 2022, with an adjusted EBITDA margin of 9.5%.

Regal Rexnord CEO, Louis Pinkham, says that the sell-off follows a strategic review. “We believe this transaction with WEG will be a true win-win for both companies' principal stakeholders. The sale of our industrial motors and generators businesses is consistent with our strategy of focusing the portfolio on products, sub-systems, end-markets and/or applications where we can achieve GDP-plus growth rates and gross margins above 35%.

“While we have made significant progress improving the growth prospects and margins at these businesses,” he adds, “we believe that WEG is in a better position to accelerate their performance going forward.”

WEG’s president Harry Schmelzer says the acquisition is aligned with his company’s strategy of continuous and sustainable growth, international expansion and diversifying its industrial operations.

“The geographic distribution of these operations are complementary to WEG's current presence and will help in achieving greater scale and efficiency in reducing costs as we integrate new operations into existing ones,” he explains. “With a long history in the market and global presence, this acquisition will support the continued growth of the WEG Group in the industrial electric motor and generator markets, through the incorporation of recognised brands and a line of products complementary to the group's current portfolio.”

Regal Rexnord was created last year following the merger of the electric motors and mechanical power transmission manufacturer Regal Beloit with Rexnord Process and Motion Control. At the time, the combined business employed about 29,000 people with manufacturing facilities on five continents.

Regal Rexnord’s motors and generators portfolio spans a broad range of sizes and technologies

Earlier this year, Regal Rexnord bought Altra Industrial Motion for $4.95bn, saying that the deal would transform it into a global automation supplier with more than 70% of its sales in expanding markets, as well as combining the companies’ “complementary” power transmission portfolios.

Regal Rexnord, headquartered in Milwaukee, Wisconsin, currently has four operating segments: Automation & Motion Control; Industrial Powertrain Solutions; Power Efficiency Solutions; and Industrial Systems. It employs 36,000 people around the world.

Regal Rexnord will use the proceeds from the sale to WEG to reduce its debt. The deal is expected to close in the first half of 2024, subject to obtaining regulatory approvals and meeting customary closing conditions.

Regal Rexnord:  Twitter  LinkedIn  Facebook

WEG:  Twitter  LinkedIn

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