REUTERS

CEO of Swiss engineering group ABB Joe Hogan addresses the company's annual news conference in Zurich February 18, 2010. ABB is looking to slash costs by an extra $1 billion as it struggles to predict when its customers will start investing again. REUTERS/Arnd Wiegmann (SWITZERLAND - Tags: BUSINESS SCI TECH HEADSHOT)

Swiss-based industrial robot maker ABB Ltd. is making a big bet on the U.S. market for motors by spending $3.1 billion to buy Arkansas-based Baldor Electric Co.

The Zurich-based power and automation company announced the purchase Tuesday in a deal that values Baldor at $63.50 a share, a 41 percent premium on Baldor's closing price Monday at $45.11 a share.

ABB said Baldor had agreed to be bought for $4.2 billion in cash, which includes $1.1 billion of net debt, as part of a merger agreement approved by the boards of both companies.

ABB already considers North America its biggest market and employs 12,000 people there. Its U.S. operations are headquartered in Cary, N.C., but ABB said it would retain Baldor's management, brand and headquarters in Fort Smith, Ark.

Baldor has 7,000 employees and reported an operating profit of $184 million on revenue of $1.29 billion from January through September.

In many ways the purchase is a wager on U.S. legislation which takes effect next month and requires tougher environmental standards for electric motors used by industry.

ABB said in a statement that the deal “positions the company as a market leader for industrial motors, including high-efficiency motors” just as the U.S. market for high-efficiency motors is expected to grow up to 15 percent next year.

It also said it expects the “regulatory changes in the U.S. and other parts of the world will accelerate demand for energy-efficient industrial motion products.”

Globally, ABB employs 117,000 in operations spanning 100 countries. Earlier this year ABB acquired U.S.-based energy software company Ventyx for more than $1 billion and another American company, K-TEK, in a private deal.

In September, the U.S. Justice Department announced that ABB had resolved charges that two of its subsidiaries offered bribes for contracts in Mexico and kickbacks for orders for equipment and services in Iraq. - Sapa-AP