U.S. manufacturer Regal Rexnord Corp will buy rival Altra Industrial Motion Corp in a $5 billion deal including debt, it said on Thursday, bolstering its automation business amid red-hot demand due to a worker shortage.
Shares of Massachusetts-based Altra, which makes automation equipment and power transmission components, surged about 48% to $59.71 before the bell, below the offer of $62 per share.
“The automation business has highly attractive growth prospects and margins, serving many markets that have anticipated secular growth tailwinds,” Regal Chief Executive Louis Pinkham said in a statement.
Wisconsin-based Regal Rexnord, which was formed by the $3.69 billion merger between Rexnord Corp and Regal Beloit earlier last year, manufactures power transmission components, electric motors and electronic controls.
The deal is valued at $4.03 billion on an equity basis.
Regal, which sees the deal closing in the first half of 2023, expects to generate savings of $160 million on a full-year run-rate basis.
J.P. Morgan and Incentrum Group are financial advisers to Regal, while Sidley Austin LLP is the legal counsel.