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Vacon buys TB Wood’s AC drives business for $29m

19 December, 2007

The Finnish drives-maker Vacon is buying the AC drives business of US-based TB Wood’s from Altra Holdings for $29m. Altra, which bought TB Wood’s in February 2007, is keeping its mechanical power transmission operations including its belt drive and elastomeric couplings activities.

Vacon’s acquisition will give it sales outlets on every continent, and R&D and production on three continents. The transaction includes two factories in the US, one in Italy and one in India, and a sales company in Germany.

The deal follows more than ten years of co-operation between Vacon and TB Wood’s, under which the US company sold Vacon-built drives badged with its own name. TB Wood’s has also acted as Vacon`s service centre in the US.

TB Woods drives

The TB Wood`s AC drives business will be merged into Vacon, and its 160-plus employees will become Vacon employees. The acquired business will be incorporated into Vacon`s financial statements by the end of January 2008 and the Vacon brand will replace the TB Wood`s and Berges brands over an 18-month transitional period. TB Wood`s DV2 drives family is shown above.

In 2006, TB Wood’s AC drives business reported an operating profit of $1.8m on revenues of $39.2m. Vacon is financing the acquisition with debt and the deal is not expected to have a material impact on its earnings per share in 2008 and 2009.

Vesa Laisi

"Strengthening our global market position is a cornerstone of Vacon`s strategy," says Vesa Laisi (above), Vacon’s president and chief executive. "This acquisition will give a significant boost to Vacon`s growth potential and market position, since the product ranges and customer bases of the companies complement each other... We also see synergy benefits to be gained in R&D and in supplier networks."

TB Woods also specialises in offering customised products to OEMs and end-users, allowing Vacon to boost its presence in this area.

At present, almost 70% of Vacon’s sales are in Europe and just 20% in North America. More than half of TB Wood’s drives sales are generated in North America, with 39% coming from Europe (see chart below).

Vacon Woods chart 

TB Wood`s, founded in 1857 as a manufacturer of wood-burning stoves, introduced V-belt drive systems in the 1930s. In 1968, it entered the electronic motor controls business, initially with DC controls, followed in 1984 by AC inverters. It specialises in AC drives for demanding environments, and will expand Vacon’s product portfolio in this market which is estimated to be worth around $300m.

Vacon is buying TB Wood’s from the Massachusetts-based Altra Corporation, which was formed in 2004 when Genstar Capital, acquired the Colfax Power Transmission Group and merged it with the bearing-maker, Kilian Manufacturing. Altra’s portfolio includes such well-known brands as Boston Gear, Warner Electric, Stieber, Wichita Clutch, Ameridrives Couplings, Marland Clutch and Nuttall Gear In 2006, it bought the UK-based Hay Hall Group, whose members include Bibby Transmissions, Huco Dynatork, Inertia Dynamics, Matrix International and Twiflex.

When Altra bought TB Wood’s in early 2007, it said that newly acquired elastomeric couplings capability would fill a critical gap in its portfolio and expand its engineered couplings revenue by more than 50%.

Vacon already has around 800 employees and operates factories in Finalnd and China.

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