Japanese multinational conglomerate Hitachi has signed an agreement to acquire ABB’s power grids business.
Initially, the Japanese firm plans to acquire an 80.1% stake for approximately $6.4bn. It expects to close the deal in the first half of 2020 and make power grids a consolidated subsidiary.
This deal puts the enterprise value of the power grids business at $11bn.
Hitachi president and CEO Toshiaki Higashihara said: “Today’s agreement between ABB and Hitachi is 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.
“Hitachi will combine ABB’s strengths in the power grids business with our digital technology to build an energy platform that contributes to innovating the energy business. This creates further innovation for business fields such as life and industry and helps us address society’s issues and improve quality of life.”
The deal will enable Hitachi to combine ABB’s advanced digital grid solutions with its own digital technology and offer innovative energy solutions on a global scale.
Additionally, the Japanese firm intends to create a new energy platform, which will connect various segments such as mobility, life, and industry.
The business comprises four segments including grid automation, grid integration, high-voltage products, and transformers.
ABB CEO Ulrich Spiesshofer said: “The combination of ABB’s power grids business with Hitachi positions power grids business for a successful long-term future as a globally leading infrastructure business.
“We crystallise the value we have built through the transformation of the last years and focus new ABB on digital industries. ABB’s power grids business will strengthen Hitachi as a global leader in energy infrastructure and Hitachi will strengthen the position of ABB’s power grids business as a global leader.
Revenues of the business stood at $10bn in the fiscal year 2017. The division has around 100 manufacturing facilities, around 200 sales locations, and 36,000 employees across the world.