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ABB to acquire B&R (Bernecker + Rainer Industrie-Elektronik GmbH) for an undisclosed sum to close ABB’s historic gap in machine and factory automation.
- B&R delivered a revenue CAGR of 11% over the last two decades and annual sales of >$600 million (2015/2016).
- ABB commits to B&R’s growth strategy, with mid-term sales ambition of >$1 billion.
- B&R’s headquarters in Austria to become ABB’s global centre for machine and factory automation.
- The purchase is being funded by ABB’s own cash and is expected to close mid-year.
The move clearly strengthens ABB’s ability to challenge Siemens in the discrete automation space and further consolidates the company’s position in the industrial sector ahead of companies like Emerson, Rockwell Automation, GE and Schneider Electric. Furthermore, it may help to soften the blow of low oil prices negatively impacting ABB’s sales of automation product to the oil and gas sector, which has represented roughly 15% of the company’s revenue.
ABB had previously struggled to build a strong presence in machine and discrete automation industries, despite commanding a leading position in process related markets. The acquisition will open new doors for ABB, allowing the companies to collaborate on their domain expertise and provide a complete solution for all industries around the Industry 4.0 and Industrial IoT initiatives.
ABB had long considered other targets with strength in discrete automation (including Rockwell Automation) before deciding on B&R. This move makes it less likely that such a weighty acquisition would take place in the near future, although ABB CEO Ulrich Spiesshofer indicated: ”There will be more acquisitions… as one of the drivers of growth going forward, but there is no ‘must haves’ we are desperate about”.
Although the client and product portfolios fit neatly together, challenges will undoubtedly come from the integration of the two companies. That said, ABB will be keen to avoid stifling the above industry average sales growth B&R has achieved historically versus the industry average.