Ingersoll-Rand to Buy Trane

Ingersoll-Rand (IR Quote) agreed to buy climate-control systems maker Trane(TT Quote) for $10.1 billion, combining two industrial powerhouses.

The deal calls for Bermuda-based Ingersoll-Rand to pay $36.50 in cash and 0.23 shares for each Trane share. Based Friday's closing prices of the stocks, the deal values Trane at $47.81 a share, a 29% premium.

Trane, based in Piscataway, N.J., previously was known as American Standard, but that company split itself into three parts earlier this year and left Trane as the remnant. The company has only been trading on the New York Stock Exchange since late November.

Trane makes heating, ventilation and air conditioning systems under the Trane and American Standard brands. Ingersoll-Rand, a diversified industrial company, already has a climate-control business under names such as Hussmann and Thermo King.

"The combination of Ingersoll Rand and Trane will create a global, diversified industrial company with projected pro forma 2008 revenues of $17 billion," said Ingersoll-Rand Chairman, President and CEO Herbert Henkel. "The new Ingersoll Rand portfolio will include an $11 billion Climate Control business which will offer high value equipment, systems and services necessary for delivering solutions across the temperature spectrum for indoor, stationary, and transport applications worldwide."

Ingersoll-Rand expects the deal to immediately add to earnings, giving it a projected profit of $4 a share in 2008.

The transaction which is expected to close late in the first quarter or early in the second quarter of 2008.