Tue Apr 4, 2017
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 $2 billion, the biggest deal under Chief Executive
Ulrich Spiesshofer's four-year leadership.
ABB had considered other targets in industrial automation, including U.S.
firm Rockwell Automation, before deciding on B&R, according to a person
familiar with the matter. ABB spokesman Saswato Das declined to
comment.
The Swiss company said acquiring B&R 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 position as the No. 2 in the $130 billion
global processing and industrial sector behind Siemens but ahead of rivals like
Emerson, Rockwell Automation and General Electric .
B&R makes programmable controls for machines used by companies like
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 shares were up 0.9 percent after the deal was announced.
"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," said Takis Spiliopoulos, an analyst at Bank Vontobel.
He said spending on industrial automation was expected to grow by around 5 to
6 percent annually in the years ahead as Western companies bring back production
from emerging markets, while oil and gas spending would remain subdued.
ABB, which depends on oil and gas
for around 15 percent of revenues, has been hit as falling oil prices have
dented demand from oil producers for products such as temperature and pressure
transmitters and flow measurement devices.
Spiesshofer said the purchase of B&R would make ABB the only industrial
automation provider offering customers the entire spectrum of technology and
software solutions around measurement, control, actuation, robotics,
digitalization and electrification, Spiesshofer said.
"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 told
reporters. "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 above $1 billion from around
$600 million now and said 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
mid-year.
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