B&R deal to help ABB better challenge Siemens
ZURICH: Swiss engineering group ABB Ltd has bought Austrian industrial automation company Bernecker & Rainer IndustrieElektronik GmbH (B&R), a move that fits in with its strategy of expanding its products to better challenge German rival Siemens AG on the factory floor.
ABB gave no purchase price for B&R when it announced the deal yesterday, but a person familiar with the matter said it was nearly $2 billion, the biggest deal under chief executive Ulrich Spiesshofer’s fouryear leadership.
The Swiss company had considered other targets in industrial automation, including US firm Rockwell Automation Inc, before deciding on B&R, according to a person familiar with the matter.
ABB said the acquisition would increase its sales in industrial automation to around $15 billion by adding B&R’s annual sales of more than $600 million.
It would also consolidate ABB’s No.2 position in the $130 billion processing and industrial sector behind Siemens but ahead of rivals such as Emerson Electric Co, Rockwell Automation and General Electric Co.
B&R makes programmable controls for machines used by companies including Nestle, Procter & Gamble and Roche.
The private company, founded by two electrical engineers in 1979, also makes components for machines used by automakers BMW, Daimler and Volkswagen. Its products include industrial PCs and factory automation devices designed to increase productivity.
ABB’s largest shareholder, Investor AB which holds a 10.48% stake according to Reuters data, welcomed 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.
The Swiss company, which depends on oil and gas for around 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 is expected to grow by around 5-6% annually in the years ahead as Western companies bring 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 in the future than in process industries like oil and gas,” 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.
The purchase is being funded from ABB’s own cash and is expected to close by mid-year.