ABB Ltd. (NYSE: ABB) and Baldor announced a pact where ABB would acquire Baldor for $63.50 per share.  The overall transaction value is listed as $4.2 billion, if you include the net debt of $1.1 billion.  The current market cap after a 40% pop is right at $3 billion.

We wanted to see if this has had any impact on Baldor’s peers.  Baldor Electric Company markets, designs and manufactures industrial electric motors, mechanical power transmission products, drives and generators.  The company employs close to 7,000 people. ABB employs about 117,000 worldwide.

A.O. Smith Corp. (NYSE: AOS) also has exposure in electric motors for the residential, commercial, and industrial markets.  It is no shock that it is higher and shares are up almost 7% at $39.64.  The 52-week trading range is $27.39 to $40.24 and its market cap is listed as $1.8 billion.

Regal Beloit Corporation (NYSE: RBC) is also higher as it makes and sells electrical and mechanical products to original equipment manufacturers, distributors, and end users. Its shares are up 5.3% at $61.39, its 52-week trading range is $45.61 to $67.32, and its market cap is currently $2.37 billion.

AMETEK, Inc. (NYSE: AME) is probably considered more indirect than Regal Beloit and than A.O. Smith.  It manufactures and sells electronic instruments and electromechanical devices in two segments: Electronic Instruments Group and Electromechanical Group.  AMETEK is up 2.0% at $59.26 and it hit a new 52-week high.  The 52-week range is $35.64 to $59.37.  One other issue to consider is its larger market cap, listed as $6.3 billion.

JON C. OGG

Reuters:   Bank of America (NYSE:BAC) picked insider Brian Moynihan as CEO.

Reuters:   Bernanke’s confirmation should pass its first hurdle.

Reuters:   The US delayed selling some of its Citigroup (NYSE:C) stock.

Reuters:   AIG (NYSE:AIG) will file an IPO for its Asian life insurance firm.

Reuters:   The US said Credit Suisse (NYSE:CS)  schemed to avoid sanctions.

WSJ:   More Americans are walking away from mortgages because they feel it is in their best financial interest.

WSJ:   Ford (NYSE:F) is looking at iPhone-like Apps for its onboard software.

WSJ:   The FTC sued Intel (NASDAQ:INTC).

WSJ:   The former wife of SAC chief Cohen accused him of insider trading.

WSJ:   Oracle (NASDAQ:ORCL) stands to gain from a rebound in business spending.

WSJ:   Yum Brands (NYSE:YUM) is moving into India.

WSJ:   Hovnanian (NYSE:HOV) narrowed losses.

WSJ:   AMR (NYSE:AMR) may raise its offer to invest in JAL.

WSJ:   RIM (NASDAQ:RIMM) may post good earnings but will show little progress against Apple’s (NASDAQ:AAP) iPhone.

WSJ:   A Harvard professor thinks healthcare must be changed by altering the way that medical teams practice.

WSJ:   More schools are offering management education to doctors.

WSJ:   UK politicians are upset about RBC’s (NYSE:RBC) role in helping Kraft (NYSE:KFT) make a run at Cadbury (NYSE:CBY).

WSJ:   Global regulators will soften capital requirements for banks.

NYT:   The government may have trouble getting out of funding mortgage-backers AIG (NYSE:AIG), Fannie Mae (NYSE:FNM), Freddie Mac (NYSE:FRE), and GMAC.

NYT:   Europe dropped its antitrust case against Microsoft (NYSE:MSFT).

NYT:   The US reported an upturn in home building.

NYT:   CNN fell behind MSNBC is annual prime time ratings.

FT:   The Fed will pull back from some of its liquidity supports.

FT:   The sale of AIG’s Asia unit could raise $20 billion.

FT:   Some insurers will launch “reputation risk” products to address issues like Tiger Woods endorsements.

Bloomberg:   A union accused Goldman Sachs (NYSE:GS) of driving trucker YRC into bankruptcy.

Douglas A. McIntyre

Allegiant Travel Co. (NASDAQ: ALGT) will be a new member of the S&P Small Cap 600 Index and will replace Regal Beloit in the index after the close of trading on Tuesday, December 8.  Allegiant is up 2.7% on only 250,00 shares.  It looks likely that more shares will need to be purchased based upon a $866 million market cap.

AOL Inc. (NYSE: AOL) is still trading as a when-issued stock but it will replace Imation Corp. (NYSE: IMN) in the S&P MidCap 400 after the close of trading on Wednesday, December 9.  Imation had a market capitalization of less than $325 million, under the minimum requirements for a mid-cap constituent.  Index sellers already have taken almost 4% out of the Imation price based upon index selling pressure as the entire weighting will be dumped.

Time Warner Inc. (NYSE: TWX), a S&P 100 and S&P 500 constituent, is spinning off AOL to shareholders on or about that date on a 1 for 11 share tax-free dividend basis.  Time Warner will remain in both the S&P 100 and S&P 500 indices. Fractional shares will be sold off and that cash will be distributed, but the tax portion is considered taxable. The exact market cap for AOL is not yet known as it trades on a when-issued basis.  That figure is north of $2.5 billion and is not deemed to be north of and is not more than $3.3 billion based on average comparisons.

The bad news is that AOL not going into the S&P 500 Index will create some mandatory S&P 500 Index benchmark fund selling in shares of Time Warner.  But the good news is that this will likely be far less index selling compared to many other key spin-offs.

Our calculations for what the real translation of index trackers differs from others because we have discussed with S&P analysts about their own interpretations of index trackers.  Based upon a conversation we had and assuming the market remains stable, we would expect only about 10 million Time Warner net shares over the coming days to have to be absorbed, and that figure will be easy to be absorbed as the indexers have a week before the formal change.  Any additional shares that need to be sold won’t have to be immediately sold as most funds have looser buy and sell policies on index changes.

JON C. OGG

Jon C. Ogg
June 14, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.