Japanese multinational conglomerate Hitachi is reportedly in the final stages of talks to take over ABB’s power grid operations for approximately JPY800bn ($7.05bn).
The acquisition is reported to be in line with the firm’s strategy to further enhance its global presence. Hitachi’s board gave the green light to move ahead with the deal, and if successful, it would be the largest acquisition made by the company.
Both ABB and Hitachi are expected to carry out a final assessment of the assets of the business and could reach an agreement as early as this week.
Initially, Hitachi intends to acquire a 50% stake in ABB’s power grid operations and plans to acquire the remaining stake over the next few years.
With this move, Hitachi aims to minimise the risks that could arise during the changes in the business environment.
On the other hand, ABB intends to spin off the unit into a separate company.
Additionally, ABB is seeking to divest the relatively low-profit division to focus on areas such as robots and factory automation.
As part of its power grid operations, ABB manufactures transformers, control systems, power transmission and distribution equipment.
Its manufacturing facilities are located at various locations across the globe, including India, China, North America, Europe and few other regions.
Upon completion of the deal, Hitachi is expected to become the world’s second-largest heavy electrical equipment maker by revenue after US-based General Electric.