Ingersoll-Rand Co. will acquire Trane Inc. for US$10 billion. The cash and stock deal—one of the largest industrial buyouts in recent years—gives Ingersoll-Rand, which makes Thermo King refrigerated trucks and Hussmann refrigerated display cases, access to Trane's building and transportation cooling systems.
The deal brings the combined company strong growth opportunities, especially for Trane sales outside the U.S., and it likely will put more emphasis on growing recurring revenues, such as servicing contracts for its equipment. The combined company now will supply both air-conditioning systems and refrigeration cases for retail giant Wal-Mart Stores Inc., so it could bid on servicing both.
Trane recently sold off its kitchen and bath business, as well as its auto braking systems business. It's keeping the well-known American Standard brand name for its heating, ventilating, and air-conditioning and related products.
The combined company is exected to earn $4 per share in 2008 and will have more than $300 million in annual pretax synergies by 2010, including savings on materials and overhead.
Under the terms of the agreement, Trane shareholders will receive $36.50 per share, or a total of about $7.5 billion, plus 0.23 Ingersoll-Rand shares for each Trane share. The deal is expected to close in spring 2008 and requires approval by regulators and Trane shareholders.
The two companies currently have a combined 64,000 employees in 109 manufacturing plants worldwide.