RBC Bearings Stock Jumps On Acquiring ABB's DODGE Mechanical Power Transmission Business For $2.9B

RBC Bearings Inc ROLL has agreed to acquire the DODGE mechanical power transmission division (DODGE) of ABB Ltd ABB for $2.9 billion in cash.
The purchase price represents 16.7x DODGE's adjusted EBITDA for the 12 months ended June 30, 2021.
DODGE operates across the construction and mining aftermarket, food & beverage, warehousing, and general machinery verticals. It generated revenue of ~$617 million and adjusted EBITDA of ~$174 million, with an adjusted EBITDA margin of 28%, for the 12 months ended June 30, 2021.
DODGE has roughly 1,500 employees worldwide and produces at six manufacturing sites, 5 in the U.S. and 1 in China.
RBC Bearings expects the acquisition to be immediately accretive to its cash EPS by ~40% to 60% in the first full fiscal year after close. It foresees cash EPS of $7.00 to $8.00 per share in the first full fiscal year.
It also expects annual pre-tax run-rate synergies of ~$70 million to $100 million by the fiscal year 2026.
A fully committed bridge facility supports the acquisition, and permanent financing includes an appropriate mix of debt and equity. The transaction is to close in Q4 of CY21.
It expects the solid cash flow of the combined business to pay down debt within five years.
RBC Bearings held cash and cash equivalents of $241.3 million as of April 3, 2021.
Price Action: ROLL shares are up 20.6% at $248.95, and ABB is up 0.61% at $36.92 during the market session the last check Monday.