Fortive Corp. — a 2016 spinoff of Danaher — has agreed to combine four operating companies from its Automation & Specialty platform (A&S platform) with Altra Industrial Motion Corp. to form a global leader in the power transmission and motion control market.

The A&S business includes the market-leading brands of Kollmorgen, Thomson, Portescap, and Jacobs Vehicle Systems.

This A&S platform generated approximately $907 million in revenue for its fiscal year ended December 2017.

The $3.0 billion deal includes $1.4 billion in cash proceeds and debt reduction for Fortive and 35 million newly issued Altra common shares to Fortive’s shareholders — valued at $1.6 billion.

“We’re excited about this announcement, as it represents a major step forward in portfolio enhancement work towards increasing focus on software and service exposure, while adding significantly to our M&A capacity,” said James A. Lico, President and CEO of Fortive.

According to Lico, the combination represents value creation for Fortive and Altra shareholders, customers, and employees.

“We have great respect for the Altra team and their commitment to continuous improvement and customer satisfaction,” added Lico. “This combination of powerful brands and remarkable people creates an organization well-positioned to capture robust Industry 4.0 growth opportunities.”

“This transaction transforms Altra and represents a major milestone towards accelerating the acquisition strategy,” said Carl Christenson, Chairman and CEO of Altra. “The addition of the A&S platform bolsters our ability to compete effectively on a larger global scale in the broader automation space, to further our continuous improvement journey … and to optimize our portfolio in an expanded acquisition universe.”

The combination will be effected as a Reverse Morris Trust (and expected to be tax-efficient to Fortive). Fortive shareholders will get shares representing approximately 54.4% of the issued and outstanding shares of Altra after giving effect to the transaction and valued at approximately $1.6 billion. In addition, Fortive will directly receive added consideration of $1.4 billion through a combination of cash proceeds and debt reduction. Until closing (expected before the end of 2018) the A&S platform businesses will operate within the Industrial Technology segment of Fortive, and financial results will be reported in continuing operations.

Fortive will have the right to designate one member of Altra’s board of directors, expected to initially be Patrick J. Murphy —  Senior V.P. of Fortive.

Fortive is a diversified industrial growth company comprised of Professional Instrumentation and Industrial Technologies businesses that are saw leaders in attractive markets. With 2017 revenues of $6.7 billion, Fortive’s well-known brands hold leading positions in field instrumentation, transportation, sensing, product realization, automation and specialty, and franchise distribution. Fortive is headquartered in Everett, Washington and employs a team of more than 26,000 research and development, manufacturing, sales, distribution, service and administrative employees in more than 50 countries around the world. With a culture rooted in continuous improvement, the core of the company’s operating model is the Fortive Business System. For more information, visit www.fortive.com.