ABB buys B&R to take on Siemens
• Engineering firm aims for industrial automation boost
Swiss engineering group ABB has bought Austrian industrial automation company Bernecker & Rainer, a move that fits in with its strategy of expanding its products to better challenge German rival Siemens on the factory floor.
ABB gave no purchase price for Bernecker & Rainer Industrie-Elektronik (B&R) when it announced the deal on Tuesday, but a person familiar with the matter said it was nearly $2bn, the biggest deal under CE Ulrich Spiesshofer’s fouryear leadership.
ABB had considered other targets in industrial automation, including US firm Rockwell Automation, before deciding on B&R, said a person familiar with the matter.
ABB spokesman Saswato Das declined to comment or confirm the purchase price.
The company said the acquisition would increase its sales in industrial automation to about $15bn by adding B&R’s annual sales of more than $600m.
It would also consolidate ABB’s second position in the $130bn processing and industrial sector behind Siemens but ahead of rivals such as Emerson, Rockwell Automation and General Electric.
B&R makes programmable controls for machines used by companies including Nestlé, Procter & Gamble and Roche.
The private company, founded by two electrical engineers in 1979, also makes components for machines used by car makers BMW, Daimler and Volkswagen. Its products include computers and factory automation devices designed to increase productivity.
ABB’s largest shareholder, Investor AB which holds a 10.48% stake according to Reuters data, hailed the deal.
“As we see it, this is a very important, strategically sound acquisition which clearly strengthens ABB’s position in factory automation,” spokesman Stefan Stern said.
“It is important for ABB to continue to work with internal efficiency and at the same time invest for the future within strategic areas.”
ABB’s second-largest investor, Cevian Capital, which campaigned for a break-up of ABB last year, declined to comment on the deal.
Shares in ABB were up 0.9%. The Swiss company, which depends on oil and gas for about 15% of its revenue, has been hit as low oil prices have dented demand from oil producers for products such as temperature and pressure transmitters and flow measurement devices.
Takis Spiliopoulos, an analyst at Bank Vontobel, said global corporate spending on industrial automation was expected to grow about 5% to 6% annually in the years ahead as western companies brought back production from emerging markets, while oil and gas spending would remain subdued.
“This is a sensible acquisition, increasing ABB’s footprint on the factory floor where we expect higher growth … than in process industries,” he said.
Spiesshofer said the B&R purchase would make ABB the only industrial automation provider offering customers the entire spectrum of technology and software solutions around measurement, control, actuation, robotics, digitalisation and electrification.
“There will be more acquisitions … as one of the drivers of growth going forward, but there is no ‘must haves’ we are desperate about,” Spiesshofer said.
“We are closing today perfectly the big gap we had in machine and factory automation, that was one gap we were always concerned about and wanted to close.”
ABB aims to increase B&R’s annual sales to more than $1bn from about $600m and said that the business would add to operating earnings per share from the first year.
The purchase is being funded from ABB’s own cash and is expected to close by the middle of 2017.
THE COMPANY SAID THE ACQUISITION WOULD INCREASE ITS SALES IN INDUSTRIAL AUTOMATION TO ABOUT $15BN