Both the companies have inked an agreement for the transaction and the deal is expected to be completed sometime during the first quarter of 2020
Switzerland based ABB will be exiting its solar inverter business in India by selling the stake to Italian company FIMER S.p.A.
ABB is the market leader in supplying solar inverters here. According to a recent Mercom report, ABB was the top supplier of solar inverters during the calendar years 2017 and 2018.
Both the companies have inked an agreement for the transaction and the deal is expected to be completed sometime during the first quarter of 2020. The valuation of the deal was not known.
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- Deal is expected to be completed sometime during the first quarter of 2020
- Co expected to take an after-tax non-operational charge of approximately $430 million in the second quarter of 2019
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"The transaction will enhance the future prospects of the solar inverter business and will enable ABB to focus its business portfolio on other growth markets," read ABB's statement.
ABB's solar inverter business is spread across 30 countries with manufacturing and research & development sites located in Italy, India and Finland.
The deal includes the solar inverter business from Power-One which was acquired by ABB's Discrete Automation and Motion division in 2013. The business offers a comprehensive portfolio of products, systems, and services for different types of solar installations. It is currently within ABB's electrification business and achieved revenues of approximately $290 million in 2018.
Tarak Mehta, president of ABB's electrification business, said, "The divestment is in line with our strategy of ongoing systematic portfolio management to strengthen competitiveness, focus on the quality of revenue and higher growth segments. Solar is a well-established and key focus for FIMER and as such we believe them to be a very good owner for ABB's solar inverter business. The combination of the portfolios under FIMER will support further sales growth. Through our intelligent low- and medium-voltage offering, ABB will continue to integrate solar power into a range of smart solutions including smart buildings, energy storage and electric vehicle charging."
ABB expects to take an after-tax non-operational charge of approximately $430 million in the second quarter of 2019, thus impacting its half-year results of this year.
Around 75% of this charge is represented by cash outflows ABB will pay to FIMER from the deal closing date through 2025. In addition, ABB expects up to $40 million of carve-out related separation costs starting in the second half of 2019.
On the acquisition, Filippo Carzaniga, chief executive officer of FIMER, said, "Our commitment to positively influencing the energy market will be realised through the development of new product platforms and innovative digital technologies. We will continue the excellent job carried out by ABB in recent years, combining precious resources, knowledge and expertise in Italy and worldwide. With a strengthened portfolio, we are better placed to shape the future of this increasingly strategic business.”
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