Blog Coverage ABB Acquires Industrial Automation Firm Bernecker & Rainer

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LONDON, UK / ACCESSWIRE / April 5, 2017 / Active Wall St. blog coverage looks at the headline from engineering major ABB Ltd (NYSE: ABB) as the Company announced on April 04, 2017, that it has acquired Austrian industrial automation Company Bernecker + Rainer Industrie-Elektronik GmbH (B&R). The financial details of the transaction were not revealed. The acquisition will help ABB expand its industrial automation services portfolio. Register with us now for your free membership and blog access at:

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One of ABB Ltd’s competitors within the Diversified Machinery space, General Electric Co. (NYSE: GE), is expected to report its fiscal quarter ending March 2017 earnings results on April 21, 2017 before market open. AWS will be initiating a research report on General Electric following the release of its next earnings results.

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Commenting on the acquisition, Ulrich Spiesshofer, CEO of ABB said:

“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.”

Josef Rainer, Co-Founder of B&R added:

“ABB’s global presence, digital offering and complementary portfolio will be key for us to further accelerate our pace of innovation and growth.”

About B&R

Eggelsberg, Austria based B&R was founded in 1979 by Erwin Bernecker and Josef Rainer. B&R is a privately owned multi-national Company that specializes in factory and process automation software and systems for a wide range of industrial applications. Its operations are spread across 70 countries and employees more than 3,000 people of which approximately 1,000 are Research and Development and application engineers. In FY16 B&R sales were in excess of $600 million. In the last two decades B&R has grown successfully with revenue CAGR (Compound Annual Growth Rate) of 11%.

The deal

ABB plans to fund the acquisition of B&R using cash in hand. The transaction is expected to be completed in mid-2017 subject to closing conditions and regulatory approvals. Though both Companies did not share the financial details, ABB disclosed that the transaction is “in-line with peer valuations”.

The acquisition will be accretive to earnings per share from the first year of operations. The merger is also expected to result in synergies of over 8% of B&R’s stand-alone revenue from the fourth year of operations.

Post the merger, B&R’s headquarters at Eggelsberg, Austria will become the Global Center for Machine and Factory Automation of ABB. After the merger, B&R will be integrated into ABB’s Industrial Automation Division and will transform into a new global business vertical – Machine & Factory Automation. This division will be headed by Hans Wimmer, the current Managing Director of B&R. The two Co-Founders of B&R, Erwin Bernecker and Josef Rainer, will ensure the continuity of the business and will act as advisors during the integration of the two Companies. B&R’s top management and employees will be integrated with ABB’s team post the merger.

Benefits of the acquisition for ABB

ABB will become the undisputed leader in industrial automation with the acquisition of B&R. The merger will integrate ABB’s robotics, process automation, digitalization, and electrification solutions with B&R’s products, software and solutions which will result in a comprehensive portfolio of services for modern machine and factory automation.

B&R’s software and Internet of Things (IoT) solutions will help strengthen ABB’s digital device to edge to cloud platform – ABB Ability.

Both Companies have a strong focus on R&D (Research and Development). Going forward ABB plans to continue its investments in R&D and support B&R’s operations and R&D initiatives.

The merger will allow ABB to tap into a new growth and revenue stream. ABB is confident that its support of B&R’s business model and operations will result in annual sales exceeding $1 billion from the current $600 million.

The merger allows ABB to improve its market positioning and take on the challenges from competitors like Siemens, Emerson Electric Co., General Electric Co., and Schneider Electric SE, etc.

Stock Performance

At the close of trading session on Tuesday, April 04, 2017, ABB Ltd’s share price finished yesterday’s trading session at $23.46, slightly up 0.95%. A total volume of 2.40 million shares exchanged hands, which was higher than the 3 months average volume of 2.26 million shares. The stock has surged 10.24% and 27.92% in the last three months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have rallied 11.34%. The stock is trading at a PE ratio of 26.84 and has a dividend yield of 3.20%. Its market capital is at $52.09 billion as per its last closing price.

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