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.
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.
Watch this also:
“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, digitalisation 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.