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RBC Bearings to Buy ABB's Dodge Unit for $2.9 Billion

The purchase price represents 16.7 times Dodge’s adjusted EBITDA for the 12 months ended June 30, RBC said.
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RBC Bearings  (ROLL) - Get RBC Bearings Incorporated Report shares soared Monday, after the precision bearings maker announced it has agreed to buy Asea Brown Boveri’s Dodge power transmission division for $2.9 billion in cash.

The purchase price represents 16.7 times Dodge’s adjusted EBITDA for the 12 months ended June 30, or 10.6 times to 11.9 times adjusted EBITDA when including estimated run-rate synergies, RBC said.

RBC traded at $246.70, up 19% at last check, leaving it up 35% for the past six months.

Dodge posted revenue of $617 million and adjusted EBITDA of $174 million for the 12 months ended June 30, representing an adjusted EBITDA margin of 28%, RBC said.

The ABB unit operates in the construction and mining aftermarket, food and beverage, warehousing and general machinery markets, with sales predominately in the Americas, RBC said.

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“The combination will enhance RBC Bearings’ capabilities, footprint, and customer base while increasing our access to Dodge’s attractive end markets,” said RBC’s CEO Michael Hartnett.

In other industrial news Monday, Otis Worldwide  (OTIS) - Get OTIS WORLDWIDE CORPORATION Report raised its earnings guidance for 2021 as the elevator/escalator maker reported stronger-than-expected earnings for the second quarter.

Otis raised its estimate for 2021 adjusted profit to a range of $2.89 to $2.93 a share from $2.78 to $2.84. The company boosted its sales forecast to a range of $14.1 billion to $14.2 billion, topping the FactSet analyst consensus of $13.9 billion.

For the second quarter, revenue climbed 22.2% to $3.70 billion from $3.03 billion. Analysts were expecting $3.45 billion.

Service sales advanced 13.8% to $1.97 billion, above analysts’ consensus of $1.92 billion.