Rexnord has agreed to merge its process and motion control (PMC) business with rival US-based power transmission component maker Regal Beloit in a Reverse Morris Trust transaction that values the unit at $3.69bn.

PMC provides specialised power transmission components and solutions, that include gear drives, bearings, couplings, industrial chain, brakes, PT drive components, and conveying solutions. The unit’s portfolio also includes industrial internet of things (IIOT) solutions.

Regal Beloit claimed that the merger will help it become a major player in industrial power transmission with a comprehensive product portfolio across the entire drive train.

The company said that PMC fills gaps in its power transmission solutions business portfolio.

Regal Beloit is currently engaged in the engineering and manufacturing of power generation, electric motors and controls, and power transmission products.

Regal Beloit CEO Louis Pinkham said: “This transformative combination brings together two highly complementary businesses, creating a premier provider of power transmission products, poised to deliver enhanced value for our customers, associates, and shareholders.

“Combining with PMC accelerates our transformation momentum and is an important step towards our vision to accelerate profitable growth.

“We believe this transaction will create meaningful value for customers by providing comprehensive solutions across the entire industrial drive train, increased portfolio and reach, and an enhanced presence in diverse and attractive end markets and geographies.”

Shareholders of Regal Beloit will hold a stake of 61.4% in the enlarged company, while Rexnord’s shareholders will own the remaining 38.6% stake.

Rexnord will retain its water management business, which will be continued to be led by the company’s chairman, president, and CEO Todd Adams.

Adams said: “This transaction provides clear and compelling value for Rexnord shareholders through ownership in a combined company with enhanced scale and significant growth opportunities.

“Regal is committed to investing in the continued growth of its power transmission business, and we are confident the PMC platform and team are a perfect fit to accelerate their strategy.”

The deal, which is subject to regulatory approvals, shareholder approvals for both the firms, and customary closing conditions, is anticipated to be completed in Q4 2021.