Regal Rexnord Corporation · NYSE:RRX
Regal Rexnord — Regal Beloit — Merger or Acquisition (January 2005)
14 slides from Regal Rexnord's merger presentation, Jan 6, 2005
Slide 1: Regal-Beloit's Acquisition of GE's HVAC Motors and Capacitors Business
Regal-Beloit's Acquisition of GE's HVAC Motors and Capacitors Business Reshaping the Electric Motor Landscape January 2005
Slide 2: Safe harbor statement
Safe harbor statement Statements made during this presentation and any related question and answer session contain "forward-looking statements" that we believe qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than st
Slide 3: Presenters
Jim Packard Chairman and CEO Henry Knueppel President and COO Dave Barta Vice President and CFO Mark Gliebe Group President Ken Kaplan Vice President, Treasurer and Secretary Dave Eisenreich Group President
Slide 4: Transaction overview
Transaction overview Acquirer Regal-Beloit Corporation Target GE's HVAC / Refrigeration Motors and Capacitors operations Consideration $400 million ($270 million cash and $130 million of RBC common stock) Closing date December 31, 2004 2005 projected sales $500 million (more than 90% HVAC motors wit
Slide 5: Business at a glance
A.O. Smith Emerson Electric Others Regal 0.2 0.2 0.05 0.385 0.165 Replacement 0.7 New 0.3 Business at a glance 2003 2004E 2005P Sales 380 440.7 500 ($ in millions) Product Offering and End Markets Leading position in growing, less cyclical HVAC motor market Source: Management estimates of US CHAC ma
Slide 6: New blue chip customers
New blue chip customers Supplying leading OEMs in the HVAC industry
Slide 7: Technology advantage that delivers growth
23% CAGR Technology Features Financial Impact Technology advantage . . . .. . . that delivers growth ECM Technology Historical ECM Unit Sales Maintains constant air flow More quiet than standard motor 30% more efficient than std. motor New "Plug and Play" compatibility Protected by over 125 patents
Slide 8: HVAC Market by SEER
HVAC Market by SEER Today SEER dynamics Seasonal Energy Efficiency Ratio (SEER) is the ratio of HVAC cooling to watts consumed 10 SEER legislated in 1992 and in effect today 12 SEER planned for January 2006 In January 2004, courts overturned 12 SEER and now require 13 SEER by January 2006 HVAC Marke
Slide 9: Acquired business management team
Mark Gliebe Group President ? 22+ years at GE Mark Gliebe Group President ? 22+ years at GE Mark Gliebe Group President ? 22+ years at GE Mark Gliebe Group President ? 22+ years at GE Mark Gliebe Group President ? 22+ years at GE Mark Gliebe Group President ? 22+ years at GE John Thomas Business Lea
Slide 10: Projected 2005 EPS accretion
Projected 2005 EPS accretion of $0.32 to $0.34 per diluted share after one-time costs estimated at $0.20 per share Guidance gives effect to higher material costs expected in 2005 versus 2004 Pro forma for related debt and equity financing activities One-time costs include integration activities and
Slide 11: Goodwill tax shield and strong balance sheet
Estimated present value of goodwill tax shield benefit of $45 to $50 million Maintains strong balance sheet with significant cash flow Pro forma combination Note: Excludes impact of subsequent equity financing activities. Amounts are pro forma, as noted in Form 8-K dated January 6, 2005. Please see
Slide 12: Shareholder agreement
Shareholder agreement Key terms of shareholder agreement with GE Requires RBC to provide GE with specific liquidity opportunities GE shares stock appreciation with RBC in exchange for downside value protection Other customary terms and conditions GE liquidity provisions Register all 4.56 million sha
Slide 13: Value sharing mechanism
Value sharing mechanism If unable to sell at least 75% of GE's stock within 150 days of delivery of 2004 HVAC and Capacitor audit, RBC value sharing of 50% over $125.7 million ceases Note: Net proceeds to be determined after underwriting and selling concessions. Value sharing / downside protection i
Slide 14: Compelling value creation
Compelling value creation Proven track record of acquiring and integrating businesses Increases Scale Expands Attractive Markets Serve less cyclical end markets Premier customer base Best-in-class products Creates Shareholder Value Accretive to earnings and ROIC Prudent capital structure for continu