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By William Trent, CFA of Stock Market BeatWe have been favorably disposed toward Rockwell Automation (ROK), which has reported decent sales growth and its factory automation products appear well suited to the current need for improved manufacturing efficiency. The company is also cleaning up its balance sheet.Baldor Electric Co agreed to acquire the power systems business and assets of Rockwell Automation Inc for $1.8 billion in cash and stock. Baldor Electric Co will pay $1.75 billion in cash and about $50 million in stock. The power systems business sells its products under the Reliance Electric and Dodge brand names. The deal is expected to close in the first quarter of 2007.According to the recent Power Systems fourth quarter sales were $264.9 million, an increase of 15 percent compared to sales of $231.1 million in the 2005 fourth quarter. Segment operating earnings were $41.6 million, an increase of 87 percent compared to $22.2 million in the fourth quarter of 2005. The increase in segment operating earnings was attributed to higher volume, productivity, net price, and lower restructuring charges somewhat offset by inflation. Power Systems return on sales was 15.7 percent in the fourth quarter of 2006 compared to 9.6 percent in 2005.Sales for the full year were $1,010.1 million, an increase of 15 percent compared to $879.6 million in 2005. Segment operating earnings were $162.6 million, an increase of 47 percent compared to $110.3 million in 2005. Power Systems return on sales for the year was 16.1 percent compared to 12.5 percent in 2005.The unit comprised just over 18% of the company’s sales in FY06 but only 4% of segment operating income. The sale values it at 15% of the company’s enterprise value, which seems to us like a solid price.The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion’s Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion’s Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options.