MILWAUKEE, Sept. 25,
2023 /PRNewswire/ -- Regal Rexnord Corporation (NYSE:
RRX) announced today that it has entered into a definitive
agreement to sell the Industrial Motors and Generators businesses
that comprise the majority of its Industrial Systems segment to
WEG, through certain subsidiaries of WEG S.A. (B3: WEGE3 / OTC:
WEGZY), for total consideration of US$400
million. The closing of the transaction, which is subject to
obtaining required regulatory approvals and meeting customary
closing conditions, is expected to occur in the first half of
2024.
Regal Rexnord CEO, Louis Pinkham,
commented on the agreement: "After a thorough strategic review,
we believe this transaction with WEG will be a true win-win for
both companies' principal stakeholders. The sale of our Industrial
Motors and Generators businesses is consistent with our strategy of
focusing the portfolio on products, sub-systems, end markets and/or
applications where we can achieve GDP-plus growth rates and gross
margins above 35%. While we have made significant progress
improving the growth prospects and margins at these businesses, we
believe that WEG is in a better position to accelerate their
performance going forward."
Pinkham continued, "Consistent with our previously stated
capital deployment intentions, all available net proceeds from the
transaction will be used to reduce our debt. In combination
with Regal Rexnord's strong expected organic cash flow generation,
we remain on track to reduce our net leverage ratio to below 2.5x
by 2025."
Pinkham concluded, "I would also like to thank our associates
at Industrial Systems for their many contributions to Regal Rexnord
over the years. I believe the transaction with WEG will create new
opportunities for our talented associates in the Motors &
Generators businesses."
Advisors
Guggenheim Securities, LLC is serving as financial advisor to
Regal Rexnord, and Godfrey & Kahn, S.C. is serving as legal
counsel.
About Regal Rexnord
Regal Rexnord Corporation is a global leader in the engineering
and manufacturing of factory automation sub-systems, industrial
powertrain solutions, automation and mechanical power transmission
components, electric motors and electronic controls, air moving
products, and specialty electrical components and systems. Through
longstanding technology leadership and an intentional focus on
producing more socially conscious and environmentally-friendly
products and sub-systems, the Company is regularly addressing
increasingly relevant secular demands of customers in the medical,
alternative energy, aerospace, food & beverage, general
industrial and warehouse/intralogistics end markets, among others.
In short, Regal Rexnord's 36,000 associates around the world are
proud to be working each day towards fulfilling the Company's
purpose – helping create a better tomorrow – for its customers and
for the planet.
Regal Rexnord is comprised of four operating segments:
Automation & Motion Control, Industrial Powertrain Solutions,
Power Efficiency Solutions and Industrial Systems. Regal Rexnord is
headquartered in Milwaukee,
Wisconsin and has manufacturing, sales, and service
facilities worldwide. For more information, visit
RegalRexnord.com.
Forward Looking Statements
This release contains forward-looking statements, within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, which reflect Regal Rexnord's current estimates,
expectations and projections about Regal Rexnord's future results,
performance, prospects and opportunities. Such forward-looking
statements may include, among other things, statements about the
proposed sale of the Industrial Motors and Generators businesses,
Regal Rexnord's ability to realize the benefits anticipated from
the sale of the Industrial Motors and Generators businesses and
other expectations and estimates for future periods, including as a
result of delay or failure to obtain certain required regulatory
approvals or the failure of any other condition to the closing of
the transaction. Forward-looking statements include statements that
are not historical facts and can be identified by forward-looking
words such as "anticipate," "believe," "confident," "estimate,"
"expect," "intend," "plan," "target," "may," "will," "project,"
"forecast," "would," "could," "should," and similar expressions.
These forward-looking statements are based upon information
currently available to Regal Rexnord and are subject to a number of
risks, uncertainties, and other factors that could cause actual
results, performance, prospects or opportunities to differ
materially from those expressed in, or implied by, these
forward-looking statements. Important factors that could cause
Regal Rexnord's, actual results to differ materially from the
results referred to in the forward-looking statements Regal Rexnord
makes in this release include: the possibility that the conditions
to the consummation of the proposed sale of the Industrial Motors
and Generators businesses (the "Proposed Sale") will not be
satisfied on the terms or timeline expected, or at all; failure to
obtain, or delays in obtaining, or adverse conditions related to
obtaining regulatory approvals sought in connection with the
Proposed Sale; the possibility that the pendency of the Proposed
Sale could materially and adversely affect Regal Rexnord's
business, financial condition, results of operation or cash flows
Regal Rexnord's substantial indebtedness as a result of the
acquisition of Altra Industrial Motion Corp. (the "Altra
Transaction") and the effects of such indebtedness on Regal
Rexnord's financial flexibility after the Altra Transaction; Regal
Rexnord's ability to achieve its objectives on reducing its
indebtedness on the desired timeline; dependence on key suppliers
and the potential effects of supply disruptions; fluctuations in
commodity prices and raw material costs; any unforeseen changes to
or the effects on liabilities, future capital expenditures,
revenue, expenses, synergies, indebtedness, financial condition,
losses and future prospects; the possibility that Regal Rexnord may
be unable to achieve expected benefits, synergies and operating
efficiencies in connection with the acquisition of Altra and the
merger with Rexnord Process & Motion Control business (the
"Rexnord PMC business") within the expected time-frames or at
all and to successfully integrate Altra and the Rexnord PMC
business; Regal Rexnord's ability to identify and execute on future
M&A opportunities, including significant M&A transactions;
the impact of any such M&A transactions on Regal Rexnord's
results, operations and financial condition, including the impact
from costs to execute and finance any such transactions; expected
or targeted future financial and operating performance and results;
operating costs, customer loss and business disruption (including,
without limitation, difficulties in maintaining relationships with
employees, customers, clients or suppliers) being greater than
expected following the Altra Transaction or the merger with the
Rexnord PMC business; Regal Rexnord's ability to retain key
executives and employees; the possibility that the information
currently available to Regal Rexnord in estimating the
benefits of the Proposed Sale discussed in this release may not
accurately reflect the results of Regal Rexnord's business for such
future periods; the continued financial and operational impacts of
and uncertainties relating to the COVID-19 pandemic on customers
and suppliers and the geographies in which they operate;
uncertainties regarding the ability to execute restructuring plans
within expected costs and timing; challenges to the tax treatment
that was elected with respect to the merger with Rexnord PMC
business and related transactions; requirements to abide by
potentially significant restrictions with respect to the tax
treatment of the merger with the Rexnord PMC business which could
limit Regal Rexnord's ability to undertake certain corporate
actions that otherwise could be advantageous; actions taken by
competitors and their ability to effectively compete in the
increasingly competitive global electric motor, drives and
controls, power generation and power transmission industries; the
ability to develop new products based on technological innovation,
such as the Internet of Things, and marketplace acceptance of new
and existing products, including products related to technology not
yet adopted or utilized in geographic locations in which Regal
Rexnord does business; dependence on significant customers;
seasonal impact on sales of products into HVAC systems and other
residential applications; risks associated with climate change and
uncertainty regarding our ability to deliver on our climate
commitments and/or to meet related investor, customer and other
third party expectations relating to our sustainability efforts;
risks associated with global manufacturing, including those
associated with public health crises and political, societal or
economic instability, including instability caused by the conflict
between Russia and Ukraine; issues and costs arising from the
integration of acquired companies and businesses and the timing and
impact of purchase accounting adjustments; prolonged declines in
one or more markets, such as heating, ventilation, air
conditioning, refrigeration, power generation, oil and gas, unit
material handling, water heating and aerospace; economic changes in
global markets, such as reduced demand for products, currency
exchange rates, inflation rates, interest rates, banking crises,
recession, government policies, including policy changes affecting
taxation, trade, tariffs, immigration, customs, border actions and
the like, and other external factors that Regal Rexnord cannot
control; product liability, asbestos and other litigation, or
claims by end users, government agencies or others that products or
customers' applications failed to perform as anticipated,
particularly in high volume applications or where such failures are
alleged to be the cause of property or casualty
claims; unanticipated liabilities of acquired businesses;
unanticipated adverse effects or liabilities from business exits or
divestitures; including in connection with the Proposed Sale;
unanticipated costs or expenses that may be incurred related to
product warranty issues; infringement of intellectual property by
third parties, challenges to intellectual property, and claims of
infringement on third party technologies; effects on earnings of
any significant impairment of goodwill; losses from failures,
breaches, attacks or disclosures involving information technology
infrastructure and data; costs and unanticipated liabilities
arising from rapidly evolving data privacy laws and regulations;
cyclical downturns affecting the global market for capital goods;
and other risks and uncertainties including, but not limited, to
those described in the section entitled "Risk Factors" in Regal
Rexnord's Annual Report on Form 10-K on file with the SEC and from
time to time in other filed reports including Regal Rexnord's
Quarterly Reports on Form 10-Q. For a more detailed description of
the risk factors associated with Regal Rexnord, please refer to
Part I, Item 1A in Regal Rexnord' s Annual Report on Form 10-K for
the fiscal year ended December 31,
2022 on file with the SEC and subsequent SEC filings,
including Regal Rexnord's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2023.
Shareholders, potential investors, and other readers are urged to
consider these factors in evaluating the forward-looking statements
and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included
in this release are made only as of the date of this release and
Regal Rexnord undertakes no obligation to update any
forward-looking information contained in this release or with
respect to the announcements described herein to reflect subsequent
events or circumstances.
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