Hitachi in talks to buy ABB Power Grids

ABB has confirmed that it is talks to sell the majority stake in its power grids division to Hitachi.

The Swiss company is said to have also been in talks recently with Mitsubishi Electric and State Grid of China for the grid business, which makes transformers and substations and is valued by some analysts at as much as $13bn

However this week Hitachi has emerged as the front runner. There is said to be a sticking point between the two companies over exactly how much of a stake Hitachi would take: reports suggest the Japanese group want a fairly balanced mix, which ABB expect Hitachi to take a clear majority share.

If the deal goes ahead ” and people close to both firms predict that it will ” then it would however mark the biggest-ever acquisition for Hitachi.

ABB’s power grid business has 36,000 staff and last year had sales of $10.4bn. However, it is not as profitable as other ABB divisions such as automation and the company is keen to build on this success.

However, Hitachi wants to expand its global power sector footprint and the buying the ABB business is likely to make it the world’s second-biggest manufacturer of heavy electrical equipment, behind General Electric.

A statement from ABB confirmed it is “currently in discussions with” Hitachi. It added that “there can be no certainty that any transaction will occur, or as to the timing, structure or terms of any transaction.”

Hitachi has released no statement but reports in financial media suggest the deal could be concluded by December 25.

Meanwhile, ABB’s Grid Integration ” part of the power grids division ” is to provide a substation for what will be Europe’s largest electric car battery factory.

The factory in Poland is owned by LG Chem, one of the largest chemical companies in the world. ABB will provide equipment including transformers, surge arrestors and gas insulated switchgear.

The new car battery plant in Kobierzyce, near Wroclaw, will be capable of supplying up to 250,000 electric cars with batteries per annum. It is also the first large-scale lithium-ion battery plant for automotive applications producing all battery components, from electrodes to cells, modules and packs.

“This substation solution is a good example of how ABB brings together domain expertise, best-in-class products and system integration capabilities” says Patrick Fragman, head of ABB’s Grid Integration business. “The project also reinforces ABB’s commitment to sustainable transportation.”

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