Swiss engineering company ABB Ltd. (ABB) is close to a deal to buy U.S.-based electrical components maker Thomas & Betts Corp. (TNB) for about $4 billion in cash, according to media reports on Sunday.
A deal, which could be announced as early as Monday, would give Zurich-based ABB a hedge against continued weak demand in Europe and stiff competition from Asian rivals.
In November, ABB Chief Executive Joseph Hogan said that the company was on the lookout for acquisitions that could boost annual growth for the period from 2011 to 2015 by 3 to 4 percent. The company, which had net cash of about $1 billion at the end of October 2011, has been seeking to boost growth through acquisitions.
A deal to acquire Thomas & Betts would be ABB's second major acquisition under Hogan, who joined the company in 2008 from General Electric Co. (GE). ABB's last major deal was in November 2010, when it purchased Baldor Electric Co., a U.S.-based maker of electric motors, for about $3.1 billion.
ABB was created in 1988 from the combination of Asea AB of Sweden and Switzerland's BBC Brown Boveri. The company competes with German conglomerate Siemens AG (SI) in sectors such as factory automation gear and power transmission equipment.
ABB, in late October, reported a profit for the third quarter that increased slightly from last year, benefiting from higher revenues as well as cost reductions that continued to more than offset price pressure. Net income available to shareholders grew 2 percent to $790 million, while revenues increased 18 percent to $9.34 billion.
Memphis, Tennessee-based Thomas & Betts, founded in 1898, makes products ranging from connectors for cables to heating and ventilation products. The company's customers include power utilities and construction companies in the U.S., Canada and Europe. Thomas & Betts, which has a market capitalization of $3.02 billion, has about 8,750 employees.
In late October, Thomas & Betts reported an increase in third-quarter profit, reflecting higher sales in its Electrical and HVAC segments as well as increased pricing across all segments. Net income from continuing operations rose 32 percent to $54.33 million, while sales rose 17 percent to $604.43 million. The company is slated to report its financial results for the fourth quarter and fiscal year 2011 on Monday.
ABB closed Friday's trading on the NYSE at $21.24, down $0.06 or 0.28 percent on a volume of 1.24 million shares.
TNB closed Friday's trading at $57.95, up $0.25 or 0.43 percent on a volume of 344,500 shares.
For comments and feedback: editorial@rttnews.com