ABB Acquires Thomas & Betts for $3.9 Billion

ABB Ltd. (NYSE: ABB) said Sunday it had reached an agreement to acquire Tennessee-based Thomas & Betts Corporation (NYSE: TNB) for $3.9 billion.

The board of directors for both companies signed off on ABB's offer of $72 per share, ostensibly doubling ABB's low-voltage products market. Thomas & Betts is a leading developer and manufacturer of low-voltage and ultralow-voltage products with both a strong North American market reach which includes a network of 6,000 distributors locations and wholesalers and also an impressive product portfolio of over 200,000 products.

On Monday, Thomas & Betts released its full year earnings for 2011 which revealed sales of $2.3 billion, up 14.6% from 2010.

Commenting on the pending merger ,Thomas & Betts Chairman and CEO Dominic J. Pileggi said, “This transaction delivers significant value to our shareholders and will enable Thomas & Betts to accelerate our global growth strategy.” 

Investors agreed. The earnings report in combination with the news of the merger sent stocks skyrocketing. By mid-day Monday, Thomas & Betts stock was up nearly 23% and climbing.

Investors were less enthusiastic about ABB. The Swiss company saw its shares down 3% Monday afternoon. However, Joe Hoggan, ABB's CEO, feels the merger is "strategically, a great fit."

“This is another big step toward our goal of expanding our presence in the key North American market. The transaction clearly supports our 2015 growth and profitability targets, and meets all of our return-on-investment criteria for creating shareholder value,” said Hoggan.

Indeed, the world leading power and automation technology group has been aggressively growing its reach into the North American market. In April 2011, the company broke ground on a $90 million AC and DC high-voltage land cable factory in Hunstville, North Carolina. With over 18,000 employees and revenues of $5 billion in the first nine months of 2011, ABB's North American division, which operates out of Cary, NC, already has a strong presence on the continent.

For Pileggi and Thomas and Betts, one of the real appeals to joining ABB is the company's global reach. ABB continues to make strides establishing itself as a global leader in the industry. In August 2011, it was awarded a $1 billion contract from transmission operator TenneT to link offshore wind farms to the German power grid -- the deal represents the largest power transmission order in the company's history.

According to Hoggan, the merger will set up both companies for continued growth and success.

“Because our products are complementary, we’ll go to market with one of the broadest offerings in the industry. That creates strong growth opportunities for both ABB and Thomas & Betts, and gives customers and distributors one-stop access to one of the widest ranges of low voltage products," he said.