Switzerland's ABB to Spend ¥79 Billion to Take Controlling Stake in Mitsubishi Electric's Power Distribution Business

en.Wedoany.com Reported - On October 20, Swiss industrial technology group ABB announced the establishment of a joint venture with Japan's Mitsubishi Electric for the low-voltage power distribution business. ABB plans to spend ¥79 billion (approximately $495 million) to acquire a 51% controlling stake in the new company and to wholly acquire Mitsubishi Electric's sales operations for related low-voltage power distribution products outside Japan. The transaction is expected to be completed in the second half of 2027, with arrangements including an option for ABB to further acquire the remaining equity in the future.

The transaction involves the low-voltage power distribution product business carved out of Mitsubishi Electric, which currently has approximately 2,800 employees and dedicated production facilities in Fukuyama, Japan, and Hanoi, Vietnam. Products include low-voltage circuit breakers, switches, motor starters, contactors, control devices, power metering and monitoring equipment, and uninterruptible power supply systems. The joint venture will build on the existing manufacturing base to supply low-voltage power distribution and circuit protection products to Japan and the Asia-Pacific region.

The Mitsubishi Electric low-voltage power distribution business included in the transaction recorded sales revenue of approximately ¥102 billion (approximately $640 million) in fiscal year 2025 ended March 2026, with an EBITDA margin in the low double-digit range. Of this, related sales operations outside Japan accounted for approximately 15% of revenue. The overall enterprise value of the business involved in this transaction is approximately $890 million, representing an enterprise value-to-sales ratio of approximately 1.4 times based on fiscal year 2025 results.

Following completion of the transaction, ABB plans to introduce its own low-voltage power distribution products, technologies, and global sales network into Mitsubishi Electric's existing customer base, and to integrate and optimize manufacturing operations. ABB expects the joint venture to contribute positively to earnings per share from the first year after completion and to achieve an operational EBITA margin of no less than 20% within five years.