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RBC BEARINGS INCORPORATED

(ROLL)
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RBC Bearings Incorporated : to buy ABB's Dodge transmission business for $2.9 bln

07/26/2021 | 08:07am EDT

ZURICH, July 26 (Reuters) - RBC Bearings on Monday agreed to buy Swiss engineering company ABB's power transmission unit Dodge for $2.9 billion, as the U.S. bearings maker looks to reduce its exposure to the pandemic-hit aerospace industry.

Shares of RBC surged as much as 19.4% to a record $246.56, while ABB's gained as much as 1%.

Dodge, which has some overlap with RBC in bearings used in food processing operations and belted drives for conveyors in mines, has an exposure to high growth markets such as warehousing, where online shopping is driving a boom during the health crisis.

RBC gets 58% of its revenue from the aerospace industry, which is struggling due to the coronavirus-led international and domestic travel restrictions.

"The combination will enhance RBC Bearings' footprint... while increasing our access to Dodge's attractive end markets," RBC Bearings Chief Executive Officer Michael Hartnett said.

Upon closing of the deal, expected in the fourth quarter of 2021, RBC's sales from aerospace will be reduced to 30% of its overall revenue, with the remainder 70% coming from a wide range of existing and new industrial end markets, the company said.

RBC said the deal would immediately add to cash earnings per share by around 40% to 60% in the first full fiscal year after close and would generate annual pre-tax run-rate savings of about $70 million to $100 million by fiscal year 2026.

ABB said it will use the proceeds to fund organic growth, higher dividends and acquisitions.

The deal is the first major divestment under ABB Chief Executive Bjorn Rosengren, who put Dodge up for sale last year as he sought to simplify ABB's complex structure, which runs from making electric ship motors to factory robots and electric fuses.

Dodge, which employs 1,500 people, generated sales of roughly $600 million in the 12 months ended June 2021, with an adjusted EBITDA margin of 28%. (Reporting by John Revill in Zurich and Ankit Ajmera in Bengaluru; Editing by Michael Shields and Shailesh Kuber)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ABB LTD -2.27% 32.2 Delayed Quote.33.43%
RBC BEARINGS INCORPORATED 8.59% 216.72 Delayed Quote.21.05%
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Analyst Recommendations on RBC BEARINGS INCORPORATED
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Financials (USD)
Sales 2022 669 M - -
Net income 2022 113 M - -
Net cash 2022 282 M - -
P/E ratio 2022 48,3x
Yield 2022 -
Capitalization 6 106 M 6 106 M -
EV / Sales 2022 8,70x
EV / Sales 2023 7,54x
Nbr of Employees 3 885
Free-Float 94,5%
Chart RBC BEARINGS INCORPORATED
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RBC Bearings Incorporated Technical Analysis Chart | ROLL | US75524B1044 | MarketScreener
Technical analysis trends RBC BEARINGS INCORPORATED
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 4
Last Close Price 216,72 $
Average target price 220,50 $
Spread / Average Target 1,74%
EPS Revisions
Managers and Directors
Michael J. Hartnett Chairman, President & Chief Executive Officer
Robert M. Sullivan VP, Chief Financial & Accounting Officer
Daniel A. Bergeron Chief Operating Officer, Director & Vice President
Edward D. Stewart Independent Director
Steven H. Kaplan Independent Director
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