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Regal Beloit Buys RAM Motor Business

Zacks Equity Research

Regal Beloit Corporation (RBC) recently completed the acquisition of the RAM motor business from Schneider Electric for an undisclosed amount.

For commercial heating ventilating and air conditioning (:HVAC) applications, this business manufactures hermetic motors from 250 hp to 2,500 hp. The strategic move by Regal Beloit is expected to strengthen its commercial hermetic motor business with complementary product offerings. This purchase will further enable the company to test and modify larger commercial hermetic motors, thereby improving its service to North American Hermetic motor customers.

Post-acquisition, the company expects the acquisition to generate net revenues of $20 million in 2013. Additionally, the acquisition is expected to be accretive to its earnings and the company expects the business to likely contribute approximately 3 cents per share in 2014. Management remains bullish about a relatively strong performance in first quarter 2013, with GAAP earnings projected in the range of $1.08 to $1.16 per share and adjusted earnings within $1.10 to $1.18.

Headquartered in Beloit, Wisconsin, Regal Beloit is a leading manufacturer of electrical and mechanical motion control products. Major products include electric motors, HVAC electric motors, electric generators and controls, and mechanical motion control products. The company has historically expanded technologically and geographically on the back of its aggressive acquisition policy.

However, the company needs to be wary of tough competition from other players in the industry such as Franklin Electric Co, Inc (FELE), Koninklijke Philips Electronics NV (PHG), and Siemens Aktiengesellschaft (SI),  all carrying  Zacks Rank #2 (Buy). Regal Beloit currently has a Zacks Rank #3 (Hold).


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