US automation major ABB is selling its Power Conversion division to Taiwan-based AcBel Polytech Inc. for $505 million in cash.
The Power Conversion division, formerly known as Lineage Power, was sold to GE Energy in 2011 for $520 million and was then acquired by ABB as part of the GE Industrial Solutions acquisition in 2018.
The division has not been core to ABB.
The division provides end-to-end power conversion solutions across telecommunications, data center, supercomputing, Electric Vehicle (EV) charging infrastructure and warehouse automation applications.
In announcing the sale, Björn Rosengren, ABB CEO, referenced their “divisional portfolio divestments”, which were announced at the end of 2020.
Sale of Mechanical Power Transmission division (Dodge) to RBC Bearings Incorporated for $2.9 billion in cash was completed November 2021 and the “spin-off” of Accelleron in October 2022 was part of company’s portfolio simplification push to focus on electrification and automation.
A Taiwan-based acquisition for US expansion
The acquiring AcBel manufactures and designs switching power supplies. With expansive focus in sustainable energy and EVs, the Taiwan-based company has operations across Taiwan, Japan, US, UK, China and the Philippines.
According to ABB, the business is well positioned and currently capitalises on key technology mega trends such as the rollout of 5G networks, the increased use of cloud computing and manufacturing automation.
With the acquisition, AcBel expects to strengthen its product portfolio, grow its customer base and enhance its local research development, manufacturing, commercial and service capabilities in the US. The division is headquartered in Plano, Texas with manufacturing facilities in Mexico, China and India.
Revenue, funding and order of events
ABB’s Power Conversion division has to date generated revenues of approximately $440 million and income from operations of approximately $50 million in 2022, with a clear focus on the North American market.
The transaction is expected to be funded by a combination of funding sources, including AcBel’s corporate funds and debt financing.
By integrating what AcBel describes as the division’s cutting-edge technologies and development expertise in system solutions, AcBel will accelerate its goal of expanding into an integrated solutions provider.
Citi is acting as exclusive financial adviser and Milbank LLP is serving as legal counsel to ABB on the transaction. The transaction is subject to regulatory approvals and is expected to be completed in the second half of 2023. Upon closing, ABB expects to record a small non-operational book gain in income from operations on the sale.