(Reuters) - Swiss engineering group ABB (ABBN.VX) is to buy U.S. industrial motors firm Baldor Electric Co (BEZ.N) for $3.1 billion to capitalize on a global push for energy efficiency and boost its North American presence.

ABB agreed to pay $63.50 a share, a 41 percent premium to Baldor's closing price on November 29 and an offer analysts regarded as pricey. The deal also included $1.1 billion in net debt.

"The acquisition of Baldor would make sense strategically and is therefore a welcome," Vontobel analyst Panagiotis Spiliopoulos said in a note. "Yet the recommended purchase price is at the upper end of the economically defensible range."

Shares in ABB, which makes equipment for oil, gas and utilities companies, were up 0.56 percent at 19.62 Swiss francs, at 1034 GMT, compared with a 0.94 percent firmer STOXX industrial goods and services index .SXNP.

ABB expects synergies to yield more than $200 million annually toearnings before interest, tax, depreciation and amortization (EBTIDA) by 2015.

The deal gives Baldor an enterprise value of about 11.1 times estimated 2011 EBITDA, a "steep valuation" compared to ABB's own EV/EBITDA ratio of 7.3 times, ING analyst Axel Funhoff said in a note.

ABB's buy comes as takeover activity is picking up globally as firms look to expand amid limp economic growth, with the value of deals so far this year already exceeding last year's $2 trillion, according to Thomson Reuters data.

MORE BUYS AHEAD?

ABB said the deal with Baldor would position it to profit from an increased demand for energy efficiency, noting that industrial motors use a quarter of all electricity generated.

It said U.S. energy efficiency legislation should drive 10 to 15 percent growth in the U.S. high efficiency motors market and it expected similar regulations in 2011 for Canada, Mexico and Europe, with Australia, China and others likely to follow.

Analysts had been expecting ABB, whose products include circuit breakers and industrial robots, to do a deal -- possibly in automation or in the United States -- given its large cash pile. Chief Executive Joe Hogan said ABB remained on the prowl.

"We still have excess cash," Hogan said in a conference call for journalists, declining to give a precise figure. "So we'll continue to look for opportunities out there."

ABB had $5.3 billion in net cash at the end of the third quarter. Baldor will fit into ABB's automation portfolio, which makes up about half of group revenues.

ZKB analyst Richard Frei said he thought ABB was now quite well covered in automation, but that it might have some blind spots in other markets. "Maybe the focus will go more in the direction of power, though I wouldn't exclude smaller acquisitions in automation," he said.

Earlier this year, ABB raised its stake in its Indian subsidiary and spent more than $1 billion on U.S. software group Ventyx.

But it pulled out of bidding for British power supply systems maker Chloride after rival U.S. suitor Emerson Electric (EMR.N) offered a higher price.

ABB said it would keep the current management of Arkansas-based Baldor, which employs about 7,000 people and reported revenue of $1.29 billion in first nine months of 2010. It produces industrial electric motors as well as a range of mechanical power transmission products, drives and generators.

Baldor competes with General Electric (GE.N) and Regal Beloit Corp (RBC.N) as well as Germany's Siemens (SIEGn.DE).

ABB, whose roots date back to a 19th-century company that made steam turbines, expected the deal to close in the first quarter of 2011 and to beearnings accretive in the first year.

Citigroup (C.N) served as adviser on the deal to ABB while UBS (UBSN.VX) advised Baldor.

($1 = 0.7606 euro)

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