Ingersoll-Rand to buy Trane in $10.1B deal

Trane’s American Standard brand will live on after the acquisition.

TRENTON, N.J. (AP) — Ingersoll-Rand Co. will acquire Trane Inc. in a $10.1 billion deal that would create one of the world’s largest makers of air conditioners, the companies announced Monday.

The deal — one of the largest industrial buyouts in recent years — gives Ingersoll-Rand, which makes Thermo King refrigerated trucks, access to Trane’s building and transportation cooling systems.

“This acquisition represents a significant next step in Ingersoll-Rand’s decade-long transformation to become a leading global diversified industrial company, with strong market positions across the climate control, industrial and security markets,” said Chief Executive Herbert Henkel.

Trane’s shares jumped 21 percent, while Ingersoll-Rand’s dipped 11 percent Monday.

Bermuda-based Ingersoll-Rand, which has operational headquarters in Woodcliff Lake, N.J., manufactures everything from golf carts to home security and has a significant climate control business.

Piscataway, N.J.-based Trane, formerly known as American Standard Companies Inc., focuses its business almost exclusively on residential and commercial climate control.

Combining the climate control operations of Trane and Ingersoll-Rand “creates a very strong business,” said Fred Poses, Trane chairman and CEO.

The combined company is expected to have 2008 revenues of $17 billion, slightly more than double the current revenue for each.

“The timing of this combination is close to perfect for both companies,” Henkel told analysts during a conference call, noting both companies have made major divestments in recent months that sharpen their focus.

Trane recently sold off its kitchen and bath business, as well as its auto braking systems business. It’s keeping the well-known American Standard brand name for its heating, ventilating and air conditioning and related products.

Under the terms of the agreement, Trane shareholders will receive a cash-and-stock trade: Ingersoll-Rand agreed to pay the shareholders $36.50 plus 0.23 of its shares for each Trane share.

That equates to about $47.81 per Trane share, nearly a 30 percent premium over Trane’s Friday closing price.