Ingersoll Rand To Buy Trane Inc.

Ingersoll-Rand Co. Ltd. announced on Monday that it has reached a definitive agreement to acquire Trane Inc. in a deal that is valued at approximately $10.1 billion, including transaction fees and the assumption of approximately $150 million of Trane net debt.

Under the terms of the deal, Ingersoll has agreed to pay Trane’s shareholders $36.50 in cash for each share. An approximate 200 million common shares will be bought by Ingersoll. Also 0.23 Ingersoll Rand shares of common stock will be given for each Trane share. The total value for this transaction comes out to be $47.81 per Trane share based on the closing price as of Dec 14, 2007.

Trane Inc., formerly known as American Standard Companies Inc., is a Piscataway, N.J. based company which provides indoor climate control systems, services and solutions. The company has expected 2007 revenues of $7.4 billion. Ingersoll-Rand has decided to acquire Trane to expand its climate control business.

Hamilton, Bermuda based manufacturing company, Ingersoll-Rand said that the acquisition will immediately add to its earnings and said that it is confident of 2008 per-share earnings of $4.

The boards of directors of both the companies have given their approval to the deal. The companies said that they are expecting to generate $300 million in pre-tax cost and revenue synergies by 2010.

Ingersoll-Rand said that its combined climate control operations are expected to achieve revenues of about $11 billion in 2008.

The chairman, president and chief executive officer of Ingersoll-Rand, Herbert Henkel, said that the combined company is expected to deliver annual organic revenue growth averaging 5% to 7% and earnings per share growth exceeding 15% per year, both in excess of the company's former growth guidance.

The companies expect the deal to be completed late in the first quarter of 2008 or early in the second quarter following shareholder and regulatory approval.

The shares of Trane Inc. had closed at $37.20 on the New York Stock Exchange on Friday, while shares of Ingersoll-Rand had closed at $49.18.