ABB bets on US solar power with $1bn deal

City A.M. Reporter
SWISS industrial group ABB is to buy US solar energy company Power-One for about $1bn (£656m), betting that growth in emerging markets will revive a sector ravaged by overcapacity and weakening demand in recession-hit Europe.

The world’s biggest supplier of industrial motors and power grids said yesterday it had agreed to pay $6.35 per share in cash for Power-One, the second-largest maker of solar inverters that allow solar power to be fed into grids.

The offer price is 57 per cent above Power-One’s closing price last Friday, boosted by $266m in net cash held by debt-free Power-One. Stripping out its cash pile, Power-One’s enterprise value stands at $762m, valuing the bid at a more modest 6.4 times 2012 core earnings.

ABB Chief Executive Joe Hogan said the deal should boost net income within a year. He said the company had no interest in buying solar panel or machinery makers.

ABB said it would pay for the transaction from its own funds and that it included Power-One’s net cash of $266m.