Shareholders at Rexnord Corp. and Regal Beloit Corp. have approved a plan to merge Rexnord's process and motion control business into Regal Beloit as part of a reverse Morris trust transaction.
Regal shareholders also signed off on changing the Beloit-based company’s name to Regal Rexnord Corp.
“It's great to see such strong support from our shareholders for the merger with Rexnord PMC, which is consistent with our expectation that the transaction will create tremendous value for all our key stakeholders,” said Louis Pinkham, chief executive officer of Regal Beloit. “Having now passed this last significant milestone on the path to close, we look forward to finalizing the merger early in the fourth quarter. Our robust integration planning activities, which have been under way since we announced the transaction back in February, have advanced nicely, and our teams are prepared – and very eager – to hit the ground running when the integration process begins.”
The deal, originally announced in February, values Rexnord’s PMC business at $3.69 billion. Rexnord will spin the business off and then it will merge into Regal. To be generally tax free for Rexnord, the company’s shareholders need to own more than 50% of Regal after the deal closes. On the surface, the deal would leave Rexnord shareholders with almost 39% of Regal, but the companies received a private letter ruling from the IRS to use overlapping shareholders to meet the threshold.
“We are pleased with our stockholders’ strong support for the value creation opportunity this transaction brings from the enhanced scale and significant growth opportunities created by the merger of our PMC segment with Regal as well as our standalone Water Management business, Zurn Water Solutions, that is well positioned to continue to drive differentiated growth through our water solutions for health, human safety and the environment,” said Todd Adams, chairman, president and CEO of Rexnord.