Regal Beloit Corporation, Beloit, WI,  has entered into an agreement to acquire 100% of the stock and assets of the Electrical Products Company (EPC) from A.O. Smith Corporation. EPC manufactures and sells a full line of motors for hermetic, pump, distribution, HVAC and general industrial applications.

EPC's product family includes Cooper B-Line and Philips Hadco lighting.

Total consideration for the transaction is approximately $875 million, including $700 million of cash and approximately $175 million in shares of Regal Beloit common stock. Regal Beloit expects the acquisition to add annual sales of over $700 million in the first full year following the acquisition, and to be accretive in the first full year following the acquisition, excluding onetime transactionrelated expenses and purchase accounting adjustments.

The transaction represents the seventh announced
acquisition for Regal Beloit in 2010.

The majority of these expenses will be incurred in the first quarter following the close of the transaction. Closing will be subject to customary regulatory approvals. EPC is based in Tipp City, Ohio. Operations include motor manufacturing facilities in the United States, Mexico, China, and the United Kingdom. This transaction represents the seventh announced acquisition for Regal Beloit in 2010, all of which are consistent with the company’s stated objectives of acquiring businesses that include energy efficiency technology, strengthen the geographic footprint and offer a synergistic fit.

Sources say key attributes of the EPC transaction include:

• Complementary product portfolio
• Leading technology for variable speed hermetic applications
• Patent portfolio with nearly 150 patents
• Expansion of the company’s global manufacturing capabilities  Targeted synergies of $30 million to $40 million achieved over 3 to 4 years
• Future tax benefits related to the deductibility of goodwill and intangible asset amortization, projected to have an estimated present value of at least $45 million to $55 million.

 "This is a defining acquisition for Regal Beloit. We believe that this acquisition achieves all three criteria of our acquisition strategy. Equally important, we are looking forward to welcoming the outstanding employees of EPC to our Company," says Henry Knueppel, CEO and Chairman of Regal Beloit. "EPC adds exciting new technologies, enhances geographic presence, and drives significant synergies. Furthermore, the transaction is expected to be accretive, excluding nonrecurring items and purchase accounting adjustments, the majority of which are expected to occur in the first quarter following the close of the transaction. This transaction provides us with a more complete product and technology portfolio, which will allow us to add value for our customers,” Knueppel says.

“Regal Beloit will be a tremendous steward for our business and we believe that Regal Beloit is a good cultural fit for the EPC organization. This transaction will benefit all of our stakeholders," says Paul Jones, CEO and chairman of A.O. Smith.