The world's biggest maker of bearings, SKF, said on Thursday that it had agreed on buying US-based Kaydon Corporation in the tune of USD1.25 billion in cash.

The buyout agreement would include USD95 million of net debt. SKF will also pay USD35.5 per share price of Kaydon's stock. SKF said the share price payment was a 22% premium based on Wednesday's closing price and recommended unanimously by shareholders. 

SKF Chief Executive Tom Johnstone said in a statement, "We have followed the development of Kaydon for a long time. They have a strong product portfolio, strong management and a solid financial performance." 

The buyout of Kaydon was seen by Reuters as a move to  set foot in the US market. It would also see SKF competing with local player Timken in its homecourt. US-based Timken and Germany's Schaeffler AG are current competitors of the Sweden-based SKF in the global bearings market. SKF accounted 62% of its sales in the United States and Canada and would like to begin securing leverage in the US market in the midst of the European financial crisis.

The deal was expected to be finalized in the last quarter of this year. JPMorgan was the lone financial advisor in the deal.