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ABB to Acquire B&R, Fortifies Industrial Automation Unit
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Swiss engineering behemoth ABB Ltd has decided to buy Austrian industrial automation company B&R. This is the first major acquisition since 2013, when Mr. Ulrich Spiesshofer joined the company as the Chief Executive Officer (CEO). Financial details of the deal have been kept under wraps. The transaction, funded in cash, is expected to close mid 2017 after fulfilling regulatory conditions.
ABB expects the acquisition to fortify its place in the industrial automation market, inching closer to German company Siemens which holds the numero uno position. It will also help the company obtain an edge over other competitors, including Emerson Electric Co. (EMR - Free Report) , Rockwell Automation Inc. (ROK - Free Report) and General Electric Company (GE - Free Report) .
B&R: A Leading Provider of Automation Devices
Headquartered in Eggelsberg, Austria, B&R offers factory automation devices to major companies across the globe, including Nestle, Procter & Gamble and BMW. With revenue CAGR of 11 % over the last two decades, the company’s growth story is quite compelling. B&R has a solid geographical footprint with operations across 70 countries worldwide and more than 3,000 employees.
Expanding the Industrial Automation Footprint
ABB aims to expand its industrial automation business, leveraging on B&R's innovative products like PLC, Industrial PCs and servo motion, software and solution suite. In a bid to fortify its digital offering, ABB plans to integrate its portfolio of digital solutions, ABB Ability with B&R's application and software platforms as well as large customer base.
ABB enjoys a dominant position in all the three major markets it serves, namely, utilities, industry and transport & infrastructure. On the other hand, B&R caters to industries like plastics, packaging, and food and beverage. The portfolios of the companies are complimentary and will eventually help ABB attain the status of a complete industrial automation provider that offers full range of technology and software solutions.
This acquisition will help the Zacks Rank #3 (Hold) company bolster its position in the factory floor where it expects higher growth in the future. The company is presently targeting mid-term sales of more than $1 billion for B&R, from its $600 million in 2015-2016.
Post the buyout, B&R will be absorbed into ABB’s Industrial Automation division as a new global business unit—Machine & Factory Automation. The transaction is expected to be accretive to the earnings per share in the first year. Going forward it is expected to add significant synergies of about 8% of B&R's stand-alone revenue in year four.
The Next Chapter of Growth?
At the end of the third quarter of 2016, ABB launched the third stage of the revamped version of its “Next Level Strategy”. This stage focuses on three areas, namely, profitable growth, relentless execution and business-led collaboration. The first two stages comprised ABB’s elaborate business pruning efforts that resulted in the reshuffle of its five segments into four entrepreneurial businesses.
Year to date, ABB’s shares have gained 11.3%, surpassing the Zacks categorized Machinery-Electrical industry’s average gain of 8.8%.
Analysts believe this noteworthy acquisition marks a major advancement in the third stage of ABB’s long-term growth strategy. Spiesshofer hinted that the company plans to take up strategic acquisitions and other major investments to bolster its position in key end markets. Buyout of B&R further allows ABB to expand its footprint in higher-margin software and services business.
ABB, which has been diligently working to usher in the Fourth Industrial Revolution, believes this acquisition is a major step forward to boost its digital solutions portfolio. Currently, the company possesses an installed base of more than 70 million connected devices, 70,000 control systems, more than 3 million automated machines and 27,000 factory installations around the globe.
Meanwhile, according to the market research report of Markets and Markets, the industrial control and factory automation market is expected to reach $153.30 billion in 2022, growing at a CAGR of 4.9% in 2016–2022. Most of this growth is expected to be fuelled by growing demand for automation products in the manufacturing process, industrial internet technologies and advancements in M2M communication. Also, efforts to improve production and operational efficiency are likely to fuel the needs of this technology.
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ABB to Acquire B&R, Fortifies Industrial Automation Unit
Swiss engineering behemoth ABB Ltd has decided to buy Austrian industrial automation company B&R. This is the first major acquisition since 2013, when Mr. Ulrich Spiesshofer joined the company as the Chief Executive Officer (CEO). Financial details of the deal have been kept under wraps. The transaction, funded in cash, is expected to close mid 2017 after fulfilling regulatory conditions.
ABB expects the acquisition to fortify its place in the industrial automation market, inching closer to German company Siemens which holds the numero uno position. It will also help the company obtain an edge over other competitors, including Emerson Electric Co. (EMR - Free Report) , Rockwell Automation Inc. (ROK - Free Report) and General Electric Company (GE - Free Report) .
B&R: A Leading Provider of Automation Devices
Headquartered in Eggelsberg, Austria, B&R offers factory automation devices to major companies across the globe, including Nestle, Procter & Gamble and BMW. With revenue CAGR of 11 % over the last two decades, the company’s growth story is quite compelling. B&R has a solid geographical footprint with operations across 70 countries worldwide and more than 3,000 employees.
Expanding the Industrial Automation Footprint
ABB aims to expand its industrial automation business, leveraging on B&R's innovative products like PLC, Industrial PCs and servo motion, software and solution suite. In a bid to fortify its digital offering, ABB plans to integrate its portfolio of digital solutions, ABB Ability with B&R's application and software platforms as well as large customer base.
ABB enjoys a dominant position in all the three major markets it serves, namely, utilities, industry and transport & infrastructure. On the other hand, B&R caters to industries like plastics, packaging, and food and beverage. The portfolios of the companies are complimentary and will eventually help ABB attain the status of a complete industrial automation provider that offers full range of technology and software solutions.
This acquisition will help the Zacks Rank #3 (Hold) company bolster its position in the factory floor where it expects higher growth in the future. The company is presently targeting mid-term sales of more than $1 billion for B&R, from its $600 million in 2015-2016.
Post the buyout, B&R will be absorbed into ABB’s Industrial Automation division as a new global business unit—Machine & Factory Automation. The transaction is expected to be accretive to the earnings per share in the first year. Going forward it is expected to add significant synergies of about 8% of B&R's stand-alone revenue in year four.
The Next Chapter of Growth?
At the end of the third quarter of 2016, ABB launched the third stage of the revamped version of its “Next Level Strategy”. This stage focuses on three areas, namely, profitable growth, relentless execution and business-led collaboration. The first two stages comprised ABB’s elaborate business pruning efforts that resulted in the reshuffle of its five segments into four entrepreneurial businesses.
Year to date, ABB’s shares have gained 11.3%, surpassing the Zacks categorized Machinery-Electrical industry’s average gain of 8.8%.
Analysts believe this noteworthy acquisition marks a major advancement in the third stage of ABB’s long-term growth strategy. Spiesshofer hinted that the company plans to take up strategic acquisitions and other major investments to bolster its position in key end markets. Buyout of B&R further allows ABB to expand its footprint in higher-margin software and services business.
ABB, which has been diligently working to usher in the Fourth Industrial Revolution, believes this acquisition is a major step forward to boost its digital solutions portfolio. Currently, the company possesses an installed base of more than 70 million connected devices, 70,000 control systems, more than 3 million automated machines and 27,000 factory installations around the globe.
Meanwhile, according to the market research report of Markets and Markets, the industrial control and factory automation market is expected to reach $153.30 billion in 2022, growing at a CAGR of 4.9% in 2016–2022. Most of this growth is expected to be fuelled by growing demand for automation products in the manufacturing process, industrial internet technologies and advancements in M2M communication. Also, efforts to improve production and operational efficiency are likely to fuel the needs of this technology.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>