ABB, Zurich, Switzerland, has signed an agreement to divest the heating, ventilation and air-conditioning (HVAC) business it acquired in 2012 as part of Thomas & Betts in a $260 million all-cash deal. Separately, ABB also said it will invest in advanced motor-components fabricator Persimmon Technologies Corp., Wakefield, Mass.
Nortek, Providence, R.I., is buying the T&B HVAC business, which includes the Reznor brand, to add to its existing range of HVAC, air-handling, security and control lines. Nortek owns some well-known brands in the electrical industry including Broan and Nutone. In addition to Reznor’s U.S. residential, commercial and industrial air conditioners, furnaces, electric heaters, condensers and air curtains, the business unit includes AmbiRad Ltd in the UK, Reznor Europe, N.V. in Belgium, Gaz Industrie S.A.S. in France and manufacturing operations in Monterrey, Mexico.
Net sales of T&B HVAC were approximately $160 million in 2013. The transaction is expected to close during the second quarter of 2014, subject to customary closing conditions.
ABB said it’s divesting this business because of limited synergies with ABB’s core power and automation portfolio. ABB will continue to supply electrical motors and drives as well as low-voltage products to the HVAC industry.
The acquisition of Thomas & Betts in 2012 advanced ABB’s strategy of expanding the reach of its Low Voltage Products division into key geographies, sectors and products, the company said in a release. By combining ABB’s low-voltage protection, control and measurement products with Thomas & Betts’ electrical components, ABB has created a broader low-voltage offering with significant market access.
In North America, the acquisition of T&B doubled ABB’s access to a market worth $24 billion, thanks to T&B’s North American network of more than 6,000 distributor locations. In Europe and Asia, ABB’s well-established distribution capabilities and coverage provide much greater market access for T&B’s product portfolio, ABB said.
“This sale allows us to focus on our electrical business and on the benefits from the synergies with ABB in North America and the rest of the world,” Thomas & Betts CEO Chuck Treadway said. “HVAC has delivered strong performance and its employees and customers will benefit from the focus and investment of Nortek, a specialist in this area. Acquiring this business will enable Nortek to extend its residential heating and cooling business into the adjacent segments of the commercial HVAC market.”
Meanwhile, ABB is adding to its investment in its other North American blockbuster acquisition — the purchase of motor giant Baldor Electric in 2010. ABB said it has invested in Persimmon Technologies, which is developing a 3D deposition technology for making motor components.
The investment was made through ABB’s venture capital unit, ABB Technology Ventures, after a $6 million investment round that included previous investors such as Intel Capital.
Since launching in 2011, Persimmon has been developing hybrid-field motor technology, a new approach to making motor components using 3D deposition processes that aim to increase power density, eliminate manufacturing steps and reduce component costs, ABB said. The company’s first prototype motor concept increases the stator effective area and produces a higher output motor with comparable size and material cost.
This development work has been funded in large part by four National Science Foundation grants and Persimmon’s latest round of funding will help it expand both its existing vacuum robotics product portfolio and invest further in the development of the hybrid-field technology. The ABB investment will also codify joint development of many new Persimmon products, allowing for the exchange of research and development information in industrial motors that Persimmon is producing today.
“ABB has been extremely impressed by Persimmon’s team and its R&D efforts to date,” said Grant Allen, principal at ABB Technology Ventures in North America. “Its innovations in the motor component manufacturing arena are especially exciting for ABB and we look forward to working closely with Persimmon to build the next generation of motor componentry.”
The Persimmon investment is indicative of ABB’s focus on research and development. ABB’s 2013 annual report, also released earlier this month, showed the power and automation giant did $42 billion in revenues for the year and invested $1.5 billion in R&D with 8,000 technologists among its global workforce of 150,000 people.
The annual report said the integration of Baldor and T&B is on track. “We made substantial progress on the integration of our two biggest acquisitions, Baldor and Thomas & Betts, and we are pleased to report that both are well on target in terms of cost synergies and overall returns on our investments,” CEO Ulrich Spiesshofer and Chairman Hubertus von Grünberg wrote in a joint introductory letter in the report.