ABB to Acquire Factory Automation Player B&R

April 5, 2017
As ‘the most important deal ABB has ever done,’ the acquisition strengthens ABB’s position as No. 2 in industrial automation, closing the gap with Siemens and answering ‘the PLC question.’

At ABB Customer World last month in Houston, ABB execs did not let on that they had big news coming down the pipeline within a few weeks. But big news came today nonetheless as ABB announced its plans to acquire B&R, a major player in machine and factory automation. ABB CEO Ulrich Spiesshofer put it this way: “Strategically, this is probably the most important deal ABB has ever done.”

It’s a move that cements ABB’s strength as No. 2 in industrial automation and significantly closes the gap with Siemens. And it puts ABB more firmly ahead of key industry competitors such as GE, Emerson, Schneider Electric, Honeywell and Rockwell Automation. “In the future, there are two major players in the world in this segment,” Spiesshofer said. “Siemens is No. 1 in factory automation. We are No. 1 in process automation and now a key player in factory automation as well.”

It’s also a move that might not have been such a surprise to those really paying attention to ABB’s October call, during which it detailed Stage 3 of its Next Level strategy. “Some people listened very carefully and realized that the change of the divisional name from Process Automation to Industrial Automation might have been flagging a certain intent already at that time,” Spiesshofer commented this morning in a call for press and analysts. “There was very clearly at that time already a clear understanding that we will add capabilities to be really a full industrial automation player.”

With its strengths in programmable logic controllers (PLCs), industrial PCs and servo motion products, B&R fills a significant gap for ABB. The PLC in particular was a gap that ABB has had in its portfolio for many years—what Spiesshofer referred to repeatedly as the “PLC question.” “This transaction marks a true milestone for ABB, as we are finally closing the historic gap in machine and factory automation that has existed since ABB was founded,” he said. “This is our answer to the PLC question that has been open for decades.”

Founded in 1979 by Erwin Bernecker and Josef Rainer in the basement of a local bank, B&R is the largest independent provider focused on product- and software-based, open-architecture products for machine and factory automation worldwide. It has shown an impressive 11 percent growth rate per year in a $20 billion market that typically expands at 4-5 percent a year. Its revenue has quintupled since the year 2000, to more than $600 million in 2015/16.

Calling itself a “hidden digital champion,” ABB finally came out into the open at its customer event in Houston to commercially launch ABB Ability, a collection of 180 segment- and industry-specific digital offerings. “Now we are bringing our extensive domain expertise and ability together with B&R’s digital offering and software suite to create a unique customer offering,” Spiesshofer said today. “ABB and B&R are a perfect fit for the digital era. We both believe strongly that open architecture and full connectivity are key elements to compete on a long-term basis. We will create customer value through deep domain expertise and end-to-end digital solutions that are tailored for the customers in all our target industries.”

Spiesshofer called the joint presence in the digital industry “impressive,” making the point that the open architecture of the large installed base between the two companies is a key differentiator. ABB has more than 6,000 solutions and more than 70,000 systems installed, with some 70 million digitally enabled devices connected. B&R, meanwhile, has about 4,000 machine builder/OEM customers, more than 3 million automation machines in the field, and about 27,000 plant installations. The marriage joins ABB Ability with B&R’s strong application and software platforms, its large installed base, customer access and tailored automation offerings.

“We looked at other alternatives, but none would have been such a strategic perfect fit without significant overlaps,” Spiesshofer said. “With B&R, we will be able to offer an unrivaled portfolio of automation solutions for machine and factory automation to ABB’s world-leading offering in process automation, robotics, digital platforms and electrification. We will be uniquely positioned to seize growth opportunities resulting from the fourth industrial revolution.”

Once the acquisition is complete, B&R will become part of ABB’s Industrial Automation division as a new global business unit called Machine & Factory Automation. The new unit will be headed by Hans Wimmer, who is currently managing director for B&R. ABB’s PLC and servo motion activities will be reverse integrated into that new unit as well. B&R’s operations in Eggelsburg, Austria, will become ABB’s global center for machine and factory automation.

“We are convinced that ABB offers the best platform for the next chapter in our growth story,” Wimmer said during this morning’s call. “We’ve always been committed to growth, and we will continue that commitment in the ABB Group.”

B&R’s co-founders Bernecker and Rainer will act as advisors during the integration phase. “I’m delighted that the owners, who have done such a tremendous job of building this wonderful company, will support us during the integration phase as advisors and guarantors of continuity,” Spiesshofer said.

ABB will fund the acquisition with cash. Although the parties agreed not to disclose the purchase price, the transaction multiple is in line with comparable multiples in this space, Spiesshofer said. The transaction is expected to close in summer 2017, subject to customary regulatory clearances.

Companies in this Article

Sponsored Recommendations

Strategizing for sustainable success in material handling and packaging

Download our visual factory brochure to explore how, together, we can fully optimize your industrial operations for ongoing success in material handling and packaging. As your...

A closer look at modern design considerations for food and beverage

With new and changing safety and hygiene regulations at top of mind, its easy to understand how other crucial aspects of machine design can get pushed aside. Our whitepaper explores...

Fueling the Future of Commercial EV Charging Infrastructure

Miguel Gudino, an Associate Application Engineer at RS, addresses various EV charging challenges and opportunities, ranging from charging station design strategies to the advanced...

Condition Monitoring for Energy and Utilities Assets

Condition monitoring is an essential element of asset management in the energy and utilities industry. The American oil and gas, water and wastewater, and electrical grid sectors...