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Case Study

The Baldor acquisition

By Arturo Bris, Ulf Hoof, Aamir Shah and Theodor Swedjemark

15 pages

December 2011

Reference: IMD-1-0307

Although initial contacts between ABB and US motor manufacturer Baldor had started a few months earlier, it was only in January 2010 when ABB finally made an unofficial offer for all of Baldor’s shares at $36 a piece. Baldor was one of the lead manufacturers of NEMA-compliant motors, the US specific standard, and the opportunity was great for ABB because the combination would allow the Zurich-based company to improve its position in the North American market while using Baldor’s distribution network to sell ABB’s drives. The huge value potential of the deal was however jeopardized by the two companies’ different cultures and the special consideration of Baldor as a family-founded company with strong values and close ties to the community.

Learning Objective

The case is a good illustration of the acquisition process from initiation to completion. The case stops at the point where ABB makes a final offer, which is rejected by Baldor. The question is then how to proceed. The case can also be used to illustrate cultural differences in the context of acquisitions, the choice of means of payments, legal considerations in the process, and the role of the due diligence team.

Keywords

Mergers and Acquisitions, Finance

Settings

Europe, United States of America
Asea Brown Boveri
2010-2011

Type

Published Sources

Available Languages

English

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