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Power electronics giant Hitachi has acquired ABB’s power grids business in an US$11 billion (£8.7 billion) deal.
Hitachi is to acquire an 80.1% stake in the power grids division and has also entered into a purchase option for the remaining 19.9% share, turning power grids into a wholly-owned subsidiary of Hitachi.
Hitachi and ABB have agreed to a deal which values the power grids business at around US$11 billion (£8.7 billion). Hitachi will pay a purchase price of US$6.4 billion (£5 billion) for the initial 80.1% after deducting debt-like items from the unit’s value.
The final purchase price will be based on customer adjustments for net working capital and net debt based on the closing date, which has been tentatively slated for H1 2020.
Hitachi said the transaction would allow it to combine ABB’s grid-level technology with Hitachi’s digital platform and look to expand Hitachi’s reach through ABB’s customer base.
FHitachi is aiming to expand its reach into adjoining markets such as emobility and C&I energy.
The global power grids market is projected to be valued at US$100 billion by 2020, with growth predominantly driven by the transition towards renewable energy and significant electrification.
ABB will focus on robotics and automation, going forward.