TNB Thomas & Betts Corp.

ABB Ltd. (ABB) is set to acquire Thomas & Betts Corporation (TNB), the North American leader in low voltage products, for $72 per share in cash or approximately $3.9 billion. Thomas & Betts was valued at a 24% premium to its closing price on January 27, 2012 and a 35% premium to the volume weighted average stock price over the past 60 trading days.

The transaction is expected to close by mid-2012, subject to customary regulatory approvals. The transaction also requires approval of majority of ABB’s shareholders in a meeting expected to be held in the second quarter.

Electrical components of Thomas & Betts complement ABB’s low-voltage protection, control and measurement products. The acquisition will broaden ABB’s low voltage portfolio. With the combination of Thomas & Betts’ network of more than 6,000 distributor locations and wholesalers in North America, and ABB’s well established distribution channels in Europe and Asia, the enhanced portfolio will be distributed widely, expanding ABB’s market reach in North America to about $24 billion.

The acquisition will help ABB to meet its 2015 growth and profitability targets and create shareholder value. It will also provide significant value to shareholders of Thomas & Betts, who have about 9,400 employees. For 2011, the company expects to report revenues of approximately $2.3 billion and earnings before interest, taxes, depreciation and amortization of approximately $390 million.  

The transaction will be financed by ABB through a $4 billion, fully underwritten bridge financing commitment secured from Bank of America Merrill Lynch. The amount will be repaid through a combination of cash and the issuance of debt. ABB expects the acquisition to be accretive in the first year of completion before one-time charges and implementation costs.

Based in Zurich (Switzerland), ABB Ltd. is a global provider of power and automation technologies that enable utility and industry customers to improve performance, while lowering environmental impact.  The company operates in approximately 100 countries, structuring its global organization into five regions: Europe, Americas, Asia, the Middle East and Africa. A major competitor of ABB Ltd. is Siemens AG (SI).

Currently, we are maintaining a Zacks #4 Rank (short-term Sell recommendation) on ABB Ltd.

 
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