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With this monumental purchase, WEG expands its global reach by 20%. Learn the details of the acquisition and its impacts on factories and markets
WEG, a Brazilian giant in the motors and generators market, is launching a new era in its history with an acquisition that will revolutionize its dominance in the sector. The company is entering a new era by acquiring Regal Rexnord's industrial engines and generators division, marking the largest merger and acquisition in its history.
WEG and its biggest acquisition
This strategic transaction will significantly boost WEG's international presence, increasing it by 20% with renowned and specialized brands.
Valuation of the assets of Regal, an American company with a market capitalization of US$9,6 billion, resulted in a value of 400 million U.S. $. Payment, in cash, will be made after obtaining regulatory approvals, scheduled for the beginning of next year.
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According to Brazil Journal, this transaction should not significantly affect WEG's capital structure, which, even after payment, it will maintain a net cash balance of R$1 billion.
The acquisition includes 10 factories located in seven countries, such as the USA, Mexico, China, India, Italy, Netherlands and Canada, strengthening WEG's global position. In addition, the transaction brings renowned brands and a team of approximately 2.800 employees.
Motors and generators: the basis of the business
The majority of the revenue acquired originates from the manufacture of low voltage industrial motors (75%), with the remainder coming from electrical generators.
The Cemp and Rotor brands have niche engine operations in the United States and Europe, opening doors to challenging markets such as oil and gas and marine, where WEG already has products but growth is slow due to complex local requirements.
Synergies and future growth
The purchase brings commercial, technical and cost synergies, with a potential positive impact of 3% to 4% in the long term, according to JP Morgan analysts. WEG plans to optimize the idle capacity of Regal's factories and seeks verticalization opportunities to further drive growth.
The transaction is a “game changer” for WEG in the generator market, positioning it as an important player globally, especially in North America, following the acquisition of Marathon.
Regal generator factories: capacity and opportunities
Regal's generator factories were underutilized due to recent construction of new units in China and Mexico. WEG plans to maximize this capacity and explore synergies to strengthen its position.
This bold acquisition of WEG promises an exciting future, with global expansion, opportunities in challenging markets and a positive impact on margins and operational efficiency.
