ABB to acquire B&R

Shaping leadership

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ABB has announced the acquisition of B&R, the largest independent provider focused on product- and software-based, open-architecture solutions for machine and factory automation worldwide. B&R, founded in 1979 by Erwin Bernecker and Josef Rainer,
is headquartered in Eggelsberg, Austria, and employs more than 3,000 people, including about 1,000 R&D and application engineers. It operates across 70 countries, generating sales of more than US$ 600 million (2015/16) in the US$ 20 billion machine and factory automation market segment.

The purchase price has not been disclosed while the company press release states that the transaction multiple is in line with peer valuations. ABB will finance the acquisition in cash, which is expected to close in summer 2017, subject to customary regulatory clearances. According to the release, the transaction is expected to be operationally EPS accretive in the first year, and would add significant synergies of about 8% of B&R’s stand-alone revenue in year four.

Through the acquisition, ABB will be uniquely positioned to seize growth opportunities in industrial automation and especially in what is known as Industry 4.0, with B&R’s strong application and software platforms, its large installed base, customer access and tailored automation solutions. “B&R is a gem in the world of machine and factory automation and this combination is a once-in-a-lifetime opportunity. This transaction marks a true milestone for ABB, as B&R will close the historic gap within ABB’s automation offering. This is a perfect fit and will make us the only industrial automation provider offering customers the entire spectrum of technology and software solutions around measurement, control, actuation, robotics, digitalization and electrification,” saidUlrich Spiesshofer, chief executive officer, ABB. “This acquisition perfectly delivers on our Next Level strategy. With our unique digital offering and our installed base of more than 70 million connected devices, 70,000 control systems and now more than 3 million automated machines and 27,000 factory installations around the world, we enable our combined global customer base to seize the huge opportunities of the Fourth Industrial Revolution.”

“This combination offers fantastic opportunities for B&R, its customers and employees. We are convinced that ABB offers the best platform for the next chapter of our growth story. ABB’s global presence, digital offering and complementary portfolio will be key for us to further accelerate our pace of innovation and growth,” said Josef Rainer, co-founder of B&R.

“This is a strong signal for our employees as our operations in Eggelsberg will become ABB’s global center for machine and factory automation,” said Erwin Bernecker, co-founder of B&R. “The most important thing to me is that the companies and their people fit so well together and that our founding location will play such a key role.”

Complementary strengths

With the acquisition, ABB will expand its industrial automation offering by integrating B&R’s innovative products in PLC, industrial PCs and servo motion as well as its software and solution suite. ABB will offer its customers a uniquely comprehensive, open-architecture automation portfolio.

B&R has grown successfully with a revenue CAGR of 11% over the last two decades. Revenues more than quintupled since 2000 to more than US$ 600 million (2015/16). The company has a rapidly growing global customer base of more than 4,000 machine manufacturers, a proven track record in automation software and solutions, and unrivalled application expertise for customers in the machine and factory automation market segment.

Both companies have complementary portfolios. While ABB is a leading provider of solutions serving customers in utilities, industry and transport & infrastructure, B&R is a leading solution provider in the automation of machines and factories for industries such as plastics, packaging, food and beverage. The joint commitment to open architecture increases customer choice and flexibility facilitating connectivity in increasingly digitalized industries.

Strong presence in India

Both ABB and B&R have a strong presence in India, with ABB having more than 40 office and manufacturing locations including its headquarters in Bengaluru. Its corporate research center and robotics manufacturing plant are also located in Bengaluru. B&R’s Indian headquarters are located in Pune with offices in major cities such as Mumbai.

Substantial investments in innovation

Innovation is at the heart of both companies. B&R invests more than 10% of its sales in R&D and employs more than 1,000 people in R&D and application engineering. ABB spends US$ 1.5 billion annually on R&D and employs some 30,000 technologists and engineering specialists. Going forward, ABB and B&R will continue to invest considerably in R&D.

Automation of machines and factories is a key driver of the Fourth Industrial Revolution and the IoT. ABB will continue B&R’s strong solution-based business model and build on its deep domain expertise to develop new software-based services and solutions for end-to-end digitalization. ABB’s industry-leading digital offering, ABB Ability, will now capitalize on the large installed base, application and solution know-how, simulation software expertise and advanced engineering tools of B&R.

Proven integration approach

On closing of the transaction, B&R will become part of ABB’s Industrial Automation division as a new global business unit – Machine & Factory Automation – headed by the current managing director, Hans Wimmer. Both companies consider B&R’s management and employees as a key driver of future growth and the business integration together with their counterparts from ABB. The co-founders of B&R, Erwin Bernecker and Josef Rainer, will act as advisors during the integration phase to ensure continuity.

The integration will be growth-focused and live by the ‘best-of-both-worlds’ principle, with ABB adding its own PLC and servo drive activities to the offering of the new business unit in a phased approach. ABB underlines its clear commitment to continuing the B&R growth story by articulating a mid-term sales ambition to exceed US$ 1 billion.

ABB is committed to further investing in the expansion of B&R’s operations and to building on the company’s successful business model and brand. B&R’s headquarters in Eggelsberg will become ABB’s global center for machine and factory automation.

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