ABB (NYSE: ABB), the leading power and automation technology
group, and Thomas & Betts Corporation (NYSE: TNB), a North
American leader in low voltage products, today announced that both
companies’ boards of directors have agreed to a transaction in
which ABB will acquire Thomas & Betts for $72 per share in cash
or approximately $3.9 billion.
The acquisition price represents a 24 percent premium to Thomas
& Betts’ closing stock price on Jan. 27, 2012 and a 35
percent premium to the volume weighted average stock price over the
past 60 trading days. The transaction is subject to approval by
Thomas & Betts shareholders as well as to customary regulatory
approvals, and is expected to close by the middle of 2012.
The complementary combination of Thomas & Betts’ electrical
components and ABB’s low-voltage protection, control and
measurement products would create a broader low voltage portfolio
that can be distributed through Thomas & Betts’ network of more
than 6,000 distributor locations and wholesalers in North America,
and through ABB’s well established distribution channels in Europe
and Asia. The combined product portfolio and enhanced distribution
network will enable ABB to double its addressable market in North
America to approximately $24 billion.
“Thomas & Betts is a well-run company with strong brands and
excellent distribution channels in the world’s largest low-voltage
products market,” said Joe Hogan, ABB’s CEO. “Because our products
are complementary, we’ll go to market with one of the broadest
offerings in the industry. That creates strong growth opportunities
for both ABB and Thomas & Betts, and gives customers and
distributors one-stop access to one of the widest ranges of low
voltage products.
“Strategically, it’s a great fit,” Hogan added. “This is another
big step toward our goal of expanding our presence in the key North
American market. The transaction clearly supports our 2015 growth
and profitability targets, and meets all of our
return-on-investment criteria for creating shareholder value.”
“This transaction delivers significant value to our shareholders
and will enable Thomas & Betts to accelerate our global growth
strategy,” said Thomas & Betts Chairman and CEO Dominic J.
Pileggi. “The combination will also enable us to provide our North
American customers and distributor network with a broader portfolio
of products and will provide long-term opportunities to our
employees. This is the right time for this transaction and I
believe strongly that ABB is the right partner for our business
going forward.”
Thomas & Betts, combined with ABB’s North American
low-voltage products business, will become a new global business
unit led out of Memphis, TN, under the leadership of Pileggi.
Thomas & Betts employs approximately 9,400 people and is
estimated to report 2011 revenues of approximately $2.3 billion and
earnings before interest, taxes, depreciation and amortization of
approximately $390 million. The company will report its full-year
results later today Central European Time. Its main business is the
manufacture of low-voltage and ultralow-voltage electrical products
such as connectors, conduits and fittings as well as wiring
management products for the construction, industrial and utilities
markets. These are complementary to the offering of ABB’s Low
Voltage Products division, which includes products such as breakers
and switches. In addition, Thomas & Betts has a leading
logistics model with its distributors that allows simple, single
invoicing and fast delivery of its full product scope. Thomas &
Betts also supplies towers for electrical power transmission and
has a business that produces heating, ventilation and air
conditioning units, both new to ABB but related to its core power
and automation focus.
ABB has secured a $4 billion, fully underwritten bridge
financing commitment from Bank of America Merrill Lynch which will
be repaid through a combination of cash and the issuance of debt.
The transaction is expected to be accretive within the first year
after it closes prior to one-time charges and implementation costs.
ABB expects the transaction will deliver approximately $200 million
in annual synergies by 2016. The majority of cost synergies are
expected to come from sourcing and purchasing efficiencies.
“This is a unique opportunity for ABB to grow in the largely
untapped North American low-voltage products market,” said Tarak
Mehta, Executive Committee member responsible for ABB’s Low Voltage
Products division, into which Thomas & Betts will be integrated
as a stand-alone unit. “We plan to keep and build on Thomas &
Betts’ strong brand and product names. We have complementary
products that can be sold together already today and other products
that will take some time to introduce to customers.”
“ABB and Thomas & Betts share a common culture. We admire
the in-depth industry expertise and enthusiasm of the Thomas &
Betts team and their excellent long-term relationship with
distributors and wholesalers,” Mehta said. “We will continue Thomas
& Betts’ successful business model with its distribution,
wholesalers and OEM customers and the Thomas & Betts executive
team will lead and drive the successful development of the new
business unit.”
Under the terms of the agreement, the transaction is structured
as a merger requiring approval of a majority of Thomas & Betts
shareholders at a special meeting, which is expected to take place
in the second quarter. Closure of the transaction is also
conditioned on customary regulatory approvals, including in both
North America and Europe.
Bank of America Merrill Lynch acted as financial adviser to ABB
and will provide the bridge financing facility and Kirkland &
Ellis LLP acted as legal advisor. Deutsche Bank Securities Inc.
acted as financial adviser to Thomas & Betts and Davis Polk
& Wardwell LLP as legal advisor.
ABB (www.abb.com) is a leader in power and automation
technologies that enable utility and industry customers to improve
their performance while lowering environmental impact. The ABB
Group of companies operates in around 100 countries and employs
about 130,000 people. The company's North American operations,
headquartered in Cary, North Carolina, employ over 18,000 people in
multiple manufacturing, service and other major facilities and
reported approximately $5 billion in revenue for the first nine
months of 2011.
Thomas & Betts (NYSE: TNB) is a global leader in the design,
manufacture and marketing of essential components used to manage
the connection, distribution, transmission and reliability of
electrical power in industrial, construction and utility
applications. With a portfolio of over 200,000 products marketed
under more than 45 premium brand names, Thomas & Betts products
are found wherever electricity is used. Headquartered in Memphis,
TN, Thomas & Betts has manufacturing facilities in 20 countries
and approximately 9,400 employees. For more information, please
visit www.tnb.com.
More information
ABB and Thomas & Betts will host an analyst, investors and
media conference call starting at 09:00 a.m. Central European Time
(CET) (08.00 a.m. in the UK, 03.00 a.m. EST, 02.00 a.m. CST). UK
callers should dial +44 203 059 5862. From Sweden, +46(0) 85 051
0031, and from the rest of Europe, +41 91 610 5600. Lines will be
open 15 minutes before the start of the conference. Audio playback
of the call will start one hour after the call ends and will be
available for 24 hours: Playback numbers: +44 207 108 6233 (UK),
+41 91 612 4330 (rest of Europe) or +1 866 416 2558 (US/Canada).
The code is 17475 followed by the # key. A podcast of the call will
be available on www.abb.com/news.
A further conference call for US analysts, investors and media
is scheduled to begin today at 14:30 p.m. CET (13:30 p.m. in the
UK, 08:30 a.m. EST, 07.30 a.m. CST). Callers should dial +1 866 291
4166 (from the US/Canada) or +41 91 610 5600 (Europe and the rest
of the world). Callers are requested to phone in 15 minutes before
the start of the call. The audio playback of the call will start
one hour after the end of the call and be available for 24 hours
commencing one hour after the conference call. Playback numbers: +1
866 416 2558 (US/Canada) or +41 91 612 4330 (Europe and the rest of
the world). The code is 19163, followed by the # key. A podcast of
the call will be available on www.abb.com/news.
Pictures are available at www.abb.com/news
ABB forward-looking statements
This press release contains "forward-looking statements"
relating to the acquisition of Thomas & Betts by ABB. Such
forward-looking statements are based on current expectations but
are subject to risks and uncertainties, many of which are difficult
to predict and are beyond the control of ABB, which could cause
actual outcomes and results to differ materially from current
expectations. No forward-looking statement can be guaranteed. Among
other risks and uncertainties, there can be no guarantee that the
acquisition will be completed, or if it is completed, that it will
close within the anticipated time frame. Additional risks and
uncertainties relating to the acquisition include: required
regulatory approvals may not be obtained in a timely manner, if at
all; the anticipated benefits of the acquisition, including
synergies, may not be realized; and the integration of Thomas &
Betts operations with those of ABB may be materially delayed or
more costly or difficult than expected. Forward-looking statements
in the press release should be evaluated together with the many
uncertainties that affect ABB's business, particularly those
identified in the cautionary factors discussion in ABB's Annual
Report on Form 20-F for the year ended Dec. 31, 2010. ABB
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
Thomas & Betts forward-looking statements
This press release includes forward-looking statements which
make assumptions regarding the company’s operations, business,
economic and political environment. Actual results may be
materially different from any future results expressed or implied
by such forward-looking statements. The company undertakes no
obligation to publicly release any revisions to any forward-looking
statements contained in this press release to reflect events or
circumstances occurring after the date of this release or to
reflect the occurrence of unanticipated events.
Additional information
In connection with the meeting of Thomas & Betts
shareholders to be held with respect to the proposed merger, Thomas
& Betts will file a proxy statement with the Securities and
Exchange Commission (the “SEC”). INVESTORS AND SECURITYHOLDERS ARE
ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE
BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE
PROPOSED MERGER BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain a free copy
of the proxy statement (when available) and other relevant
documents filed by Thomas & Betts with the SEC from the SEC’s
website at http://www.sec.gov and from Thomas & Betts by
directing a request to Thomas & Betts, 8155 T&B Boulevard,
Memphis, TN 38125. Attention: Investor Relations.
Thomas & Betts and its directors, executive officers and
certain other employees may be deemed to be participants in the
solicitation of proxies of Thomas & Betts shareholders in
connection with the proposed merger. Investors and security holders
may obtain more detailed information regarding the names,
affiliations and interests of Thomas & Betts directors and
executive officers by reading Thomas & Betts’ proxy statement
for its 2011 annual meeting of shareholders, which was filed with
the SEC on March 11, 2011. Additional information regarding
potential participants in such proxy solicitation and a description
of their direct and indirect interests, by security holdings or
otherwise, will be included in the proxy statement and other
relevant materials filed by Thomas & Betts with the SEC in
connection with the proposed merger when they become available.
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