RBC Bearings Nears $3 Billion Deal for ABB’s Dodge Unit

ABB Ltd. is in advanced talks to sell its mechanical power transmission business to RBC Bearings Inc., according to people familiar with the matter, as Chief Executive Officer Bjoern Rosengren swiftly overhauls the Swiss industrial giant.

A deal could be reached as soon as this week and value the business, known as Dodge, at between $2.5 billion and $3 billion, said the people, who asked to not be identified because the matter isn’t public. Discussions are ongoing, and a potential deal could still be delayed or fall apart, they added.

ABB announced in November that it would explore options for Dodge, as well as its turbocharging unit and power conversion business. The Dodge unit drew interest from suitors including Schaeffler AG and Timken Co., Bloomberg News previously reported.

A successful sale would indicate industry veteran Rosengren, with a track record of turning around companies, is making headway on revamping ABB’s conglomerate structure. He took the helm last year after intense pressure on the company from anchor investors, including Cevian Capital, to raise profitability.

A representative for ABB declined to comment while RBC Bearings couldn’t be immediately reached.

Dodge’s products include mounted bearings, enclosed gearing and bushings for industrial applications. ABB acquired the business as part of its 2011 purchase of Baldor Electric Co.

Based in Oxford, Connecticut, and led by industry veteran Michael J. Hartnett, RBC Bearings makes bearings, control rods, couplings and other parts for the aerospace, construction and mining industries, according to its website. An acquisition of Dodge would be by far the company’s biggest-ever takeover, according to data compiled by Bloomberg.

RBC Bearings’s stock rose 2% to close near an all-time high of $206.51 in New York on Friday, giving the company a market value of about $5.2 billion.

ABB CEO Rosengren said last week he hoped to sign a deal for Dodge “within a couple of weeks.” He also said an initial public offering of its electric-vehicle charging business could be readied for the fourth quarter and move ahead in early 2022. The separation of the turbocharger division has already begun and a possible spinoff could happen in the second quarter of next year.

ABB shares have gained 36% this year in Zurich trading, valuing the company at 69 billion Swiss francs ($75 billion). The company last week raised its full-year guidance on revenue growth to about 10% from the previous forecast of 5% or more.

©2021 Bloomberg L.P.

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