A major industry manufacturer has sold its decades-old pool and spa pump motors division.
Milwaukee-based A.O. Smith, which had been in the motors business for approximately 60 years, completed the sale to Regal Beloit Corp. in late August.
The deal, which included A.O. Smith’s entire Electrical Products segment, was worth an estimated $875 million in cash and stock.
“We did have a strong position in the motors segment, so this was a tough decision for us,” said Mark Petrarca, senior vice president of human resources and public affairs at A.O. Smith.
“In fact, it was a troubled business for a long time, and it took a lot of work bringing it back to profitability,” he added. “But looking ahead, there weren’t a lot of viable alternatives to grow it here. So we decided if we couldn’t be No. 1 or 2 in the motor business, we wanted it to be part of a company that could.”
The acquisition, which was announced in December but required regulatory approval by the U.S. Department of Justice, covers nearly 8,000 employees at manufacturing plants around the world. A.O. Smith’s Electrical Products segment produces motors for a number of residential and commercial applications, among them pool and spa pumps.
But that aspect of the business was significant enough to prompt a lengthy review by the DOJ, which ultimately required Regal Beloit to sell its own business for electric pool and spa pump motors before the transaction could be completed. That sale, to Phoenix-based SNTech, also took place in late August; it was worth a reported $23.4 million.
Reviews by the DOJ are fairly typical in cases where two companies in the same industry join forces. Regulators will examine any overlapping businesses to ensure an acquisition doesn’t put the public at a disadvantage through inflated prices or diminished customer service, or create a monopoly in the marketplace.
“The acquisition as originally proposed would have lessened the vigorous competition that currently exists among manufacturers of electric motors for pool and spa pumps, resulting in higher prices and lower quality products,” said Sharis Pozen, acting assistant attorney general in the DOJ’s Antitrust Division, in a written statement.
This is at least the second significant purchase of a key player in the pool and spa pump motors category of late. Last year, Emerson Electric Co. sold its motors and controls businesses to Japan-based Nidec Corp. for more than $800 million, according to published reports.
With the company’s motors assets now belonging to Regal Beloit, A.O. Smith is set to focus on its water technologies unit. That segment accounted for the majority of A.O. Smith’s $1.5 billion in revenues for 2010.
A representative from Regal Beloit, based in Beloit, Wis., could not be reached for comment by press time.