Swiss ower and automation technology group ABB today said it was acquiring the UK-based Chloride, a provider of uninterruptible power supply equipment, for £860 million (approximately Rs5,863 / $1.3 billion), setting up a potential bidding war with US-based Emerson Electric Co.
ABB's offer of 325 pence per Chloride share, representing a premium of 55.5 per cent, based on Chloride's closing price of 209 pence on 23 April 2010, has been accepted by the board of the London-based Chloride.
Chloride, which is the largest supplier of uninterruptible power supply equipment in the UK, had in April rejected its larger transatlantic rival Emerson's 275 pence a share offer, valuing it at £723 million, which Chloride rejected as it undervalued the company. (See: UK's Chloride Group turns down £723 million merger offer from Emerson Electric)
In its earlier 2008 bid, Emerson had offered 270 pence per share, but talks broke down after the development became public. The offer, although on the lower side in pound sterling terms, valued the company at about $1.3 billion in dollar terms at the time due to exchange rate fluctuations.
Ferguson, Missouri-based Emerson said in a statement today that it was considering its position and would make an announcement in due course.
Chloride, which had sales of 326.7 million in 2009, is a leader in uninterruptible power supply (UPS) systems with solutions for a wide range of applications, including data centres and energy and infrastructure applications.
It has a strong market for UPS systems in parts of Europe and Asia. Chloride had acquired a 90-per cent stake in DB Power Electronics, India's leading UPS maker in July 2009.
ABB is a leading, global provider of power and automation products, including a broad offering of electrification products.
With 2009 revenues of nearly $32 billion, the Zurich-based ABB reported a cash pile of $7.1 billion as of end March 2010, leading analysts to assume that it would make aggressive acquisitions.
''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.
''The transaction is in line with our strategy to acquire companies especially in areas where demand is converging across both of these businesses,'' he added.
Chloride's UPS are used in applications where power quality and security are critically important, which will come in use in ABB's traditional utilities and for its industrial customers such as the oil, gas, and petrochemicals industry as well as new sectors in service industries such as data centres, financial institutions, hospitals and airports.
ABB's power and automation offering for UPS customers includes drives, high- and medium-voltage switchgear, transformers, as well as 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, said ABB.