ABB Acquires Communication Networks Business
Electrification products, power grids, industrial automation and robotics company ABB, Ltd. (NYSE: ABB – $24.88) said it has agreed to acquire the mission-critical communication business of Germany’s KEYMILE Group to strengthen its communication networks portfolio. The acquisition will bring with it key products, software and service solutions, as well as research and development expertise. These components will further enhance ABB’s industry-leading digital offering – ABB Ability – by adding extremely reliable communications technologies that are essential to maintain today’s dynamic and complex digital electrical grids. The transaction is expected to close during the third quarter of 2017. Both parties have agreed not to disclose the value of the deal.
The Zurich-based company has moved its business focus from pure hardware to digital services and software in recent years. ABB’s robotics business has been an example of this, as it has gone from selling robots meant to perform specific tasks to a more solution-oriented approach. Holdings in good-quality ABB have disappointed since entering the conservative portfolio, but over the past year the shares have gained 25% in value and provided a handsome 3.1% dividend yield. Looking ahead, positions should continue to appeal to conservative investors willing to exercise some more patience. The dividend minimizes downside risk to some extent and appreciation potential out to the 2020- 2022 stretch appears worthwhile, especially when viewed on a risk-adjusted basis.