ABB Buys UK’s Rotork in $5.5 Billion Deal for Automation Boost
(Bloomberg) — ABB Ltd. agreed to buy British industrial components company Rotork Plc for an enterprise value of around $5.5 billion to expand its electrification and automation businesses.
Under the deal, ABB’s biggest-ever acquisition, Rotork investors will get £5.03 ($6.81) in cash per share, a premium of around 60% on its latest three-month average price, the Swiss industrial company said Thursday. ABB also signaled it has deep pockets for more purchases.
Rotork makes equipment that opens and closes industrial valves to control the movement of liquids and gases through pipelines and plants. The Bath, England-based company has significant exposure to energy, water infrastructure and utilities. Its sale marks the latest in a string of acquisitions of UK firms by foreign buyers this year.
ABB’s chief executive officer, Morten Wierod, has streamlined its portfolio since taking over nearly two years ago to tap into burgeoning investment in the data centers underpinning the AI boom. The Zurich-based manufacturer, which makes the transformers that enable power grids to feed the centers’ energy needs, last year sold its robotics division for more than $5 billion and focused on targeted acquisitions.
Its push into industrial AI and automation has helped drive its shares up about 70% in the past year. They slipped about 3.3% in Zurich Thursday, while Rotork surged by as much as 67% to a record £4.86.
Wierod said ABB has a pot of $13 billion available for additional purchases, telling Bloomberg TV the company is “in a very strong position with a strong balance sheet.”
“When we want to do M&A we can do,” he added. “We’re taking a wide view and are looking at every area.”
With the Rotork deal, the value of takeovers of UK companies listed in London has risen almost 130% this year to roughly $64 billion, data compiled by Bloomberg show. Well-known names like asset manager Schroders Plc, ingredients maker Tate & Lyle Plc and insurer Beazley Plc have all agreed to be acquired by overseas rivals.
This boom in acquisitions comes at the same time as the UK’s stock exchange struggles to attract new listings – posing concerns over the country’s status a global business hub.
ABB rivals like Germany’s Siemens AG and Schneider Electric SE of France have also benefited from the spurt in AI-related demand and have been active as well in dealmaking. Schneider agreed this month to buy Cognite in a $3.1 billion all-cash deal to expand its industrial data and AI software operations, part of an accelerating push to modernize Europe’s factories.
RBC analyst Mark Fielding said the Rotork purchase makes sense for ABB and includes “an attractive premium.” However, the fact that the British firm is “a niche asset” means there could be a counter bid from among “the larger process-equipment companies,” Fielding said in a note.
Having already raised its revenue outlook for the year in April, ABB did so again on Thursday, predicting low double-digit to low-teens growth.
ABB also reported second-quarter orders that surpassed expectations, jumping by 30% compared with the same period a year earlier to $12 billion, comfortably beating estimates.
“When we talk with customers, the pipeline is very strong so the outlook in this sector for the next quarters and years is very strong,” Wierod told Bloomberg TV, referring to ABB’s electrification business. “And we are well positioned to capture that.”
ABB had already announced Wednesday that it bought French company Advantics, adding high-efficiency silicon carbide power-conversion technology to its portfolio. It didn’t publish financial details.
The purchase reinforces its position across the AI power chain, according to Bloomberg Intelligence, which expects ABB’s data-center revenue to rise to about €9.9 billion ($11.4 billion) by 2030 from €3 billion last year.
“Schneider and Vertiv should retain leadership, but ABB looks well placed to narrow the gap as AI data centers shift toward higher-value power architectures,” Omid Vaziri, a senior BI industry analyst, said in a note.
Barclays Plc is advising ABB on the Rotork deal, while JPMorgan Chase & Co., Rothschild & Co. and Jefferies Financial Group Inc. are working with Rotork.
–With assistance from Oliver Crook, Fareed Sahloul and Jonathan Browning.
(Updates with context on UK takeovers, stock listings starting in third paragraph)
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