Hitachi today announced that it will acquire ABB’s power grids business for around $6.4bn.
The news ends weeks of speculation about a potential deal between the Japanese conglomerate and the Swiss engineering giant.
Hitachi president Toshiaki Higashihara said that the pact with ABB was “a significant turning point in the global power and energy markets at a time when digital technology is fundamentally changing our society and the pattern of energy demand and supply is diversifying”.
He said Hitachi would combine ABB’s strengths “with our digital technology to build an energy platform that contributes to innovating the energy business. This creates further innovation for business fields and helps us address society’s issues and improve quality of life.”
Tokyo-headquartered Hitachi valued the power grids business – which comprises Grid Automation, Grid Integration, High Voltage Products and Transformers – at $11bn. It will initially acquire an 80.1 per cent stake and expects to close the deal in the first half of 2020. It has also entered into a purchase option to acquire the remaining 19.9 per cent.
Based on its own research, Hitachi believes the global power grid market will be worth more than $100bn by 2020, driven by the rise of renewables, digitalization, electric vehicles and energy storage, plus deregulation and reforms many countries and regions.
In 2017, ABB’s power grids revenues totalled $10bn, a slight increase on the $9.9bn of 2016. The division has around 100 manufacturing bases, approximately 200 sales locations and 36,000 staff.
Zurich-headquartered ABB has undertaken around 120 HVDC projects representing a total installed capacity of more than 130,000 MW, which accounts for about half of the global installed base.
ABB chief executive Ulrich Spiesshofer said the deal with Hitachi positioned the power grids business “for a successful long-term future as a globally leading infrastructure business”.