ABB has signed a definitive agreement to divest its Mechanical Power Transmission division (Dodge) to RBC Bearings Incorporated for $2.9 billion in cash.

The transaction will create a leading manufacturer of highly engineered, performance-critical bearings and motion control components serving the aerospace, defence and industrial markets.

For more than 140 years, the Dodge business has been a leader in the design, production, and marketing of mounted bearings, enclosed gearing and power transmission components. It offers one of the broadest portfolios of mechanical power transmission products in the market, selling to industries including surface mining. It has roughly 1,500 employees worldwide and achieved revenues of approximately $600 million for the last 12 months ending June 30, 2021.

It produces at six manufacturing sites – five in the US and one in China – and its headquarters is located in Greenville, South Carolina.

“We are delighted that Dodge has found an excellent new home with RBC Bearings, where it can continue its exciting growth story,” ABB CEO, Björn Rosengren, said. “This transaction further strengthens ABB’s balance sheet. In line with our capital allocation priorities, we plan to first use the proceeds from the transaction to fund organic growth, pay a rising sustainable dividend per share and make value-creating acquisitions. Furthermore, we will give an update on our plans for the Turbocharging exit and possible listing of our E-Mobility division in due course.”

RBC Bearings Chairman, President and Chief Executive Officer, Dr Michael J Hartnett, said: “The combination will enhance RBC Bearings’ capabilities, footprint, and customer access while increasing our exposure to Dodge’s attractive end markets. Our businesses are highly complementary, with Dodge bringing new offerings, new end markets, and more scale to the combined organisation. The combined company will have an attractive position in the aerospace, defence and industrial markets with a diversified client base and expansive geographic footprint.”

The transaction is expected to be completed by the end of the year 2021, subject to customary closing conditions, including regulatory review.