Ingersoll-Rand to buy Trane for about $10.1 billion

17 December 2007

Within days of completing the sale of its Bobcat, the utility equipment and attachments business units to Doosan Infracore for approximately $4.9 billion (net cash proceeds of approximately $3.75 billion) on 30 November 2007, Ingersoll-Rand Co Ltd today said that it would acquire indoor heating and air conditioning systems maker Trane Inc TT.N, in cash and stock amounting to around $10.1 billion.

Diversified manufacturer Ingersoll-Rand will also assume about $150 million of Trane's net debt.
 
The acquisition, aimed at expanding its own climate control business, would create a global diversified industrial company with expected pro forma 2008 revenue of $17 billion and $2 billion of EBIT, with combined climate control operations yielding a revenue of about $11 billion in 2008.

Under the terms of the deal, Ingersoll will pay $36.50 per share in cash and 0.23 shares of its own stock approximating $47.81.00 in total value per Trane share, based on the closing price as of December 14, 2007. The company says the transaction would be immediately accretive to earnings with an estimated 2008 earning per share of of $4.00. cost and revenue synergies are expected to exceed $300 million by 2010

The deal has received approval from both companies' boards of directors

"The acquisition of Trane meets our long-term objectives of significantly increasing consistency of revenue and income streams, adding strong brands and market positions, and further strengthening the organic growth potential of our portfolio." said Herbert L. Henkel, Ingersoll Rand chairman, president and chief executive officer.

"We believe the new Ingersoll Rand will be capable of sustaining annual organic revenue growth averaging 5-7 per cent and EPS growth exceeding 15 per cent per year, both in excess of our former growth guidance."