ABB Again Goes Big in Acquisition Hunt, Bids Premium Price for Chloride Group

June 18, 2010
ABB Group, Zurich, Switzerland, is continuing to use its billions in cash reserves to add large operating units to its various power and automation and

ABB Group, Zurich, Switzerland, is continuing to use its billions in cash reserves to add large operating units to its various power and automation and control interests. ABB is positioning for another billion-dollar acquisition now with a bid to buy Chloride Group PLC, a London-based manufacturer of uninterruptible power supply (UPS) systems, for 860 million British pounds, or roughly $1.3 billion.

The bid surpassed an earlier offer for Chloride from Emerson Electric by 20 percent. Chloride's board has agreed to recommend ABB's offer to shareholders. If approved, the acquisition would be ABB's second billion-dollar acquisition in two months, following the deal in May to buy Ventyx, an Atlanta-based software provider specializing in systems to manage energy networks.

Adding Chloride's UPS products to the mix will give ABB an even stronger package to sell for providing power to large industrial and processing plants, as well as opening doors in markets such as hospitals and data centers where ABB has been less active. ABB is a major player worldwide in power grid components and systems and automation and drives, robotics and substations for industrial facilities.

“The combination of Chloride's strong position in the fast-growing medium- to high-power UPS business with ABB's global reach and complementary power and automation offering provides significant growth opportunities for both businesses,” said Joe Hogan, ABB's CEO, in a press release. “The transaction is in line with our strategy to acquire companies especially in areas where demand is converging across both of these businesses.”

Chloride's UPS offering is used in applications where power quality and security are critically important. This includes ABB's traditional utility and industrial customer base as well as new sectors in service industries such as data centers, financial institutions, hospitals and airports.

Chloride would be integrated into ABB's Discrete Automation and Motion division. “Chloride's strength in UPS solutions and ABB's existing offering will provide customers with a very attractive package to ensure power quality and critical power supply. Chloride would become the global center for UPS within ABB,” said Ulrich Spiesshofer, head of the Discrete Automation and Motion division.

ABB's power and automation offering for Chloride's UPS customers includes drives, high- and medium-voltage switchgear, transformers and low-voltage products and systems. With the integration of Chloride, ABB would be able to offer a broad package of power quality, security and related service solutions.

There's no word yet from Emerson about whether it will raise its offer after having two earlier bids declined by Chloride's board and shareholders. Emerson is already a significant player in UPS systems.

The market for UPS systems has grown rapidly in recent years due to infrastructure investments and increasing demands for safe and secure power to protect data centers and internet connections.