I’ve been extremely busy for the past couple of months. It’s been hard to find time to write here. One of my projects completed Sunday. The new Maintenance Technology & Asset Performance website went live. Lots of work to launch one of those babies! Kudos internally to our digital guru Greg Pietras. Also to long-time friend Jon DiPietro and Authentia for putting it together.
ABB Financial News
ABB just released first quarter financial results. Overall, business looks good. There are two nuggets worth mining, though.
The company has begun divesting (OK, the opposite of M&A) pieces of companies that it has acquired over the past couple of years. ABB Chief Executive Officer Ulrich Spiesshofer said, “With the divestiture of Thomas & Betts HVAC business, and the Power-One Power Solutions business we announced yesterday, we are making good progress in our portfolio pruning efforts.”
I noticed an executive shuffle a couple of years ago moving some talented executives from the systems business to the power business. Well, now I see why. Check out this statement from Spiesshofer:
“We remain on track in four divisions who combined to deliver higher early-cycle orders, steady earnings and stronger cash flow in the first quarter. Strong order growth and cash generation in Discrete Automation and Motion and solid revenue execution in Low Voltage Products were highlights in the quarter. Power Products maintained its solid profitability, and operational EBITDA margin in Process Automation was at record levels.
“We are disappointed with the continued poor performance in Power Systems and are rigorously executing actions that go well beyond the previously-announced strategic realignment,” Spiesshofer said. “After a thorough review, the new leadership has initiated a ‘step change’ program and already taken a number of corrective decisions. These include the discontinuation of bidding for solar EPC projects and further management changes. The transformation of PS will take longer than originally expected, but we remain confident that the outcome will be a strong and competitive business.
“Looking ahead, our ambitions in 2014 are to continue the solid performance in four of our five divisions and drive the turnaround in PS.” he said. “At the same time, our leadership team is making good progress on our longer-term strategic plan and we look forward to presenting it at our capital markets day in September.”
Manufacturing M&A Business
Meanwhile, I received this information from PwC US (PriceWaterhousCoopers).
In the first quarter of 2014, the total value for merger and acquisition (M&A) activity in the industrial manufacturing sector surpassed both the previous quarter and the same time period in 2013, largely driven by the successful completion of several mega deals, or transactions worth more than $1 billion, according to PwC US. While the total number of deals dropped slightly from fourth quarter of 2013, activity was in line with the first quarter of last year.
The first quarter of 2014 recorded 33 transactions (with values of $50 million or more) in the industrial manufacturing sector for a total deal value of $14.7 billion compared to 40 deals in the fourth quarter of 2013 worth $9.8 billion. Deal activity was more in line with the first quarter of 2013, which similarly recorded 33 deals but only logged $11.3 billion in total value. The significant increase in value in the first quarter of 2014 stemmed from four mega deals totaling $9.1 billion or 62 percent of total value. Mega deal activity drove an increase in average deal value to $447 million compared to $245 million in the fourth quarter of 2013 and $343 million on a year-over-year basis.
This corresponds to some information I’ve picked up through other means about interest in acquisitions in the industrial automation space. This could be an interesting year for playing with the Control magazine Top 50 list.
