Regal Rexnord Makes A Big Play For Scale And Diversification

Considering the disruptions created by the pandemic, it's challenging to evaluate the performance of Regal Rexnord (NYSE:RRX) since the transformative combination of Regal Beloit and Rexnord's PMC business in early 2021. Still, the company has more or less stayed on track relative to my initial financial expectations, and the shares had been modestly outperforming the average industrial since my last update.

Now, Regal Rexnord management is taking another big swing at scale, diversification, and growth, announcing an all-cash acquisition of Altra Industrial Motion (AIMC) for $62/share. These businesses should be highly complementary, and I like the opportunities for cross-selling and expense synergy, as well as diversification. While the combined businesses will still have significant short-cycle leverage, not the best thing for the environment I expect in 2023-2024, I like the added exposure to automation and medical markets.

 

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Regal Rexnord Makes A Big Play For Scale And Diversification