ZURICH: Swiss engineering group ABB said on Monday it had agreed to buy US electrical components maker Thomas & Betts for $3.9 billion in cash to broaden its inroads into the world's largest market for low-voltage products.
Under the terms of the deal ABB will pay $72 per share in cash for Thomas & Betts, a 24 percent premium over the stock's Friday's closing price.
ABB, which makes products used by oil, mining and utility companies, has looked to expand its presence in North America, buying industrial motor business Baldor Electric for $4.2 billion in 2010.
Thomas & Betts, which competes with companies like Cooper Industries and Hubbell Inc, makes products ranging from connectors for cables to heating and ventilation products.
The company sells many of its products to US utilities, which are expected to increase spending over the next several years to build new transmission and distribution lines and bring older plants in line with new environmental regulations.
"Because our products are complementary, we'll go to market with one of the broadest offerings in the industry," Chief Executive Joe Hogan said in a statement.
"This is another big step toward our goal of expanding our presence in the key North American market."
Zurich-based ABB, which had some $1 billion in net cash at the end of the third quarter, has been on the prowl for buys to plug gaps in its portfolio and has said acquisitions could potentially add another 3 to 4 percent to its overall growth rate.
Through the deal, ABB will gain access to Thomas & Betts network of more than 6,000 distributor locations and wholesalers in North America, allowing it to double the size of its market to $24 billion.
Memphis-based Thomas & Betts, which reported 2011 sales of $2.3 billion on Monday, employs some 9,400 people.
ABB, whose products are used by oil, mining and utility companies, expects some $200 million in annual cost savings from the deal by 2016.
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