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ABB will pay $3.9 billion to pick up low voltage power product maker Thomas & Betts Corp.

The combination of Thomas & Betts’ electrical components and ABB’s low-voltage protection, control and measurement products could create a broader low voltage portfolio that can distribute through Thomas & Betts’ network of more than 6,000 distributor locations and wholesalers in North America, and through ABB’s distribution channels in Europe and Asia.

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The combined product portfolio and enhanced distribution network will enable ABB to double its addressable market in North America to approximately $24 billion.

“Thomas & Betts is a well-run company with strong brands and excellent distribution channels in the world’s largest low-voltage products market,” said Joe Hogan, ABB’s chief executive. “Because our products are complementary, we’ll go to market with one of the broadest offerings in the industry. That creates strong growth opportunities for both ABB and Thomas & Betts, and gives customers and distributors one-stop access to one of the widest ranges of low voltage products.

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“Strategically, it’s a great fit,” Hogan said. “This is another big step toward our goal of expanding our presence in the key North American market. The transaction clearly supports our 2015 growth and profitability targets, and meets all of our return-on-investment criteria for creating shareholder value.”

“The combination will also enable us to provide our North American customers and distributor network with a broader portfolio of products and will provide long-term opportunities to our employees,” said Thomas & Betts Chairman and Chief Executive Dominic J. Pileggi. “This is the right time for this transaction and I believe strongly that ABB is the right partner for our business going forward.”

Thomas & Betts, combined with ABB’s North American low-voltage products business, will become a new global business unit led out of Memphis, TN, under the leadership of Pileggi.

Thomas & Betts employs 9,400 people and should report 2011 revenues of approximately $2.3 billion and earnings before interest, taxes, depreciation and amortization of approximately $390 million.

Its main business is the manufacture of low-voltage and ultralow-voltage electrical products such as connectors, conduits and fittings as well as wiring management products for the construction, industrial and utilities markets. These are complementary to the offering of ABB’s Low Voltage Products division, which includes products such as breakers and switches. In addition, Thomas & Betts has a leading logistics model with its distributor base that allows simple, single invoicing and fast delivery of its full product scope. Thomas & Betts also supplies towers for electrical power transmission and has a business that produces heating, ventilation and air conditioning units, both new to ABB but related to its core power and automation focus.

ABB expects the transaction will deliver $200 million in synergies by 2016. The majority of cost synergies should come from sourcing and purchasing efficiencies.

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