Sunday, January 29, 2012

Thomas & Betts Sold for $3.9 Billion

ABB, the world’s largest maker of power-distribution equipment, agreed to buy Memphis, Tennessee-based Thomas & Betts Corp. for $3.9 billion to expand its North American offerings of low voltage equipment.

ABB is paying $72 per share in cash for Thomas & Betts – 24% higher than Friday's closing price on the New York Stock Exchange. Thomas & Betts employs 9,400 people, generating more than $2.3 billion in revenue last year.

Thomas & Betts marks the second major acquisition for Zurich-based ABB under Chief Executive Officer Joe Hogan, who joined the company in 2008 from General Electric. 

He bolstered ABB's market position in the U.S. with the January 2011 purchase of motor giant Baldor Electric for $3.1 billion. That deal added industrial motors and drives and gave ABB heft in automation, where it competes with Siemens.

“Because our products are complementary, we’ll go to market with one of the broadest offerings in the industry,” Hogan said in the statement. “Strategically, it’s a great fit.”

ABB said it plans to reap $200 million annually from the purchase by 2016, mainly from sourcing and purchasing. Thomas & Betts CEO Dominic Pileggi will be in charge of the new global business unit, ABB said.

Thomas & Betts was founded in New Jersey in 1898, as a sales agency for electrical wire and raceway.  It now makes cable ties, electrical fittings and steel outlet boxes used in the electrical, telecommunications, construction and utility industries. 

ABB has said the Thomas & Betts purchase may boost annual sales growth by as much as 4 percent until 2015. 

By 2015, ABB wants to generate as much as 30 percent of revenue from the region, compared with 19 percent in 2010. 

The company has said that it will continue to focus on power and automation and does not intend to divest assets.

MTA's East Side Access Shake Up

Construction of the East Side Access project includes drilling tunnels under the East River, excavating deep underneath Grand Central Terminal to create a subterranean concourse, and building a huge ventilation system on East 50th Street. When the $7.4 billion project is completed, Long Island Rail Road commuters will be able to travel directly to Grand Central.

On Friday -- in an effort to fast-track the much-delayed mega project -- the MTA removed construction giant Dragados from much of the Grand Central portion of the job, because it missed too many deadlines. 

Dragados was holding up other parts of the massive project, according to the watchdog agency covering the MTA.  

The holdups were causing backups for the entire undertaking, because other contractors couldn't begin work on some sections until Dragados had finished its work and cleared the area.

The MTA's reduction of Dragados' work could save money since construction companies, which now must bid for the Grand Central excavation work, are so competitive in today's economy. The move is expected to shavemore than two years off the excavation deep beneath Grand Central Terminal, a key element of the largest infrastructure project in MTA history.

The excavation work was once slated to be finished by this summer. But last fall, contractor Dragados told the MTA it didn't expect substantial completion of work until as late as 2015. In a newly restructured system of incentives and penalties, Dragados could now be docked as much as $49.5 million for future delays on its outstanding work, but could reap as much as $16 million in incentives if it finishes the digging on the main tunnel by August of 2013.

The MTA has told the federal government this East Side Access program will be completed sometime between June of 2016 and April of 2018. But no one will commit to that date because there are so many factors like Amtrak building under the East River near where the MTA tunnel is.

That project involves replacing all of the tracks inside the four East River tunnels which could take up to four years and is being staged from the same Long Island City rail yard used for the East Side Access project.