Behind the ABB – Baldor Electric acquisition

This morning, Baldor Electric announced that it was being acquired by ABB in a $4.2 billion deal. You can read the entire release here.

To find out more about what it might mean to the materials handling industry, I spoke to Randy Colip, Baldor Electric’s executive vice president of motor sales.

First, both ABB and Baldor gain access to new products and new markets.

Baldor gains access to ABB’s line of IEC motors, what Colip described as “true European IEC motors.” IEC stands for the International Electrotechnical Commission, and it is the European equivalent of NEMA in the United States. An IEC motor, according to Colip, is a metric motor, and typically is a smaller-framed motor than those produced in the U.S. What’s more they are readily available in the replacement market in Europe and Southeast Asia. “North American material handling manufacturers are interested in IEC motors if they are selling their products in Europe or Southeast Asia,” Colip explained. Although Baldor has a line of IEC motors, he added, “they’re not the true European IECs that material handling equipment manufacturers are looking for.” At the same time, ABB has not effectively penetrated the US market, something Baldor believes it can do with its sales force.

Baldor gains access to a broader portfolio of rotary servo motors and controls from ABB than they currently offer.

And, Baldor gains access to ABB’s line of AC Variable Frequency Drives (VFD’s), the technology that allows users to vary the speed of conveyors and sortation systems to match demand rather than run flat out all the time. “ABB is the world’s largest producer of AC VFD’s,” Colip said. “That gives us the opportunity to sell a complete motor and drive package, something we really couldn’t do in the past.”

Last, Baldor gains access to new markets outside of North America for its NEMA-rated motors through ABB’s sales force. In addition to gaining more access to the North American market for its IEC motors, ABB also gains access to Baldor’s line of linear motors.

“ABB does not have its own line of NEMA-rated motors and it doesn’t have a line of linear motors,” Colip said. “We see this as a very complimentary acquisition, and we’re excited about it.”

The deal is expected to close in the first quarter of 2011.