ABB buys Austrian group to boost industrial automation

5 April 2017

ABB has bought Austrian group Bernecker + Rainer Industrie-Elektronik, the Swiss engineering company said on Tuesday, helping it to challenge German rival Siemens in the industrial automation sector.

The biggest deal under Chief Executive Ulrich Spiesshofer's four-year leadership is part of ABB's strategy of expanding its product line-up beyond processing raw materials, where price swings have dented demand from oil and gas companies.

ABB declined to reveal what it was paying for B+R, but a person familiar with the matter said it was close to $2 billion.

B+R, which was founded by two friends in the basement of an Austrian bank in 1979, makes programmable controls for machines used by companies like Nestle, Procter & Gamble, and Roche.

The privately held company also makes components for machines used by automotive makers BMW, Daimler and Volkswagen. Its products include industrial PCs and factory automation devices which are designed to increase productivity.

The deal increases ABB's sales in the industrial automation segment to around $15 billion and consolidates its position as number two in the $130 billion global industrial automation sector behind Siemens.

"B+R is a gem in the world of machine and factory automation," Spiesshofer said in a statement.

"It will make us the only industrial automation provider offering customers the entire spectrum of technology and software solutions around measurement, control, actuation, robotics, digitalisation and electrification."

The purchase will add to ABB's industrial automation division, which has struggled in recent quarters.

Sales for the division, which also competes with Emerson , Rockwell Automation, and Schneider, fell 9 percent in 2016, while new orders dropped 20 percent, largely due to falling demand from oil and gas customers.

The B+R deal, ABB's biggest acquisition since it bought U.S. low-voltage products maker Thomas & Betts for $3.9 billion in 2012, is a departure from Spiesshofer's previous strategy which has focused on trimming costs and shedding fringe businesses.

Zurich-based ABB said it was aiming to increase B+R's annual sales from more than $600 million at present to more than $1 billion, and said the business would add to ABB's operating earnings per share from the first year.

The purchase is being funded from ABB's own cash and is expected to be completed by mid-year.