Regal Rexnord to sell Industrial Motors and Generators business to WEG

Regal Rexnord (RRX) has entered into a definitive agreement to sell the Industrial Motors and Generators businesses that comprise the majority of its Industrial Systems segment to WEG, through certain subsidiaries of WEG S.A. (WEGZY), for total consideration of $400M. The closing of the transaction, which is subject to obtaining required regulatory approvals and meeting customary closing conditions, is expected to occur in the first half of 2024. Regal Rexnord CEO, Louis Pinkham, commented on the agreement: “After a thorough strategic review, we believe this transaction with WEG will be a true win-win for both companies’ principal stakeholders. The sale of our Industrial Motors and Generators businesses is consistent with our strategy of focusing the portfolio on products, sub-systems, end markets and/or applications where we can achieve GDP-plus growth rates and gross margins above 35%. While we have made significant progress improving the growth prospects and margins at these businesses, we believe that WEG is in a better position to accelerate their performance going forward. Consistent with our previously stated capital deployment intentions, all available net proceeds from the transaction will be used to reduce our debt. In combination with Regal Rexnord’s strong expected organic cash flow generation, we remain on track to reduce our net leverage ratio to below 2.5x by 2025.”