Press Release

Hitachi Completes Acquisition of ABB’s Power Grids Business

Hitachi, Ltd. announced that it has completed the procedures for its 80.1% investment in the company operating power grids business that had been carved out from ABB Ltd, pursuant to the acquisition agreement signed on December 17, 2018(1). The new company, Hitachi ABB Power Grids Ltd (“Hitachi ABB Power Grids”) was launched and began operation today. Under the leadership of Claudio Facchin as CEO and Toshikazu Nishino, Executive Vice President of Hitachi, as Chairman, Hitachi ABB Power Grids will expand Hitachi’s energy solutions business globally as a core part of the company’s Social Innovation Business.

By combining world-class power grids business with Hitachi’s advanced digital technologies such as Lumada(2), Hitachi and Hitachi ABB Power Grids will provide innovative energy solutions spanning the Energy (utilities), Mobility, Smart Life (cities), Industry, and IT sectors. With roots in Hitachi and ABB, the new business will build on more than one century of expertise in pioneering engineering technologies, enabling customers to increase efficiency and maintaining resilience. It will unlock new business models and contribute social, environmental and economic values for a sustainable society.

The world’s energy markets are going through an unprecedented transformation needed to realize the energy transition. The need for innovative energy solutions is being driven by short- and long-term global trends. The share of renewables in the energy mix is increasing significantly and will play a key role in achieving the ambitious decarbonization targets set by countries around the world. Intermittent by nature, renewable energy sources have resulted in increased complexity; while many countries have made great strides in the adoption of renewables, they now need to manage a more dynamic system, requiring increased flexibility and resilience to achieve a sustainable outcome. Many more interconnections will be required to maximize the penetration of renewables in the energy market.

The rapid rise in distributed power generation and changes in consumption patterns (for example, the emergence of prosumers) are parts of this changing energy landscape. Furthermore, the growth of electric vehicles and expansion of the world’s data centers has ramped up electricity demand. At the same time, advances in digitization require the adoption of new business models.

The power grid market is worth around US$100 billion in 2020. Markets related to digital utilities, such as predictive maintenance, distributed power supply and asset optimization are expected to grow strongly(3).

The demand for electricity continues to outpace the rising need for energy; the challenge is to meet this growing demand while minimizing environmental impact for a sustainable energy future. Hitachi ABB Power Grids is uniquely positioned as a market and technology leader, with a proven track record of pioneering innovation and a vast global customer base served through a manufacturing, service, sales and R&D network in around 90 countries. By combining its world-class power grid solutions with Hitachi’s leading digital technologies, Hitachi ABB Power Grids will co-create innovative energy solutions with customers and partners, with the ambition of “Powering Good for Sustainable Energy.”

The new joint venture and its 36,000 employees remain committed to be the partner of choice for stronger, smarter, and greener power grids. Underpinned by a customer-focused mindset and a world-class R&D organization of around 2,000 experts, the company will continue to differentiate itself through customer service, domain expertise, technology and innovation, an unparalleled global footprint, and an installed base.

Hitachi ABB Power Grids will also leverage Hitachi’s digital solutions portfolio, enabling it to expand its presence in sectors like Energy (utilities), Mobility, Smart Life (e.g. smart cities and energy storage), Industry and IT (e.g. data centers) – all contributing to our Social Innovation Business. Through Hitachi ABB Power Grids, Hitachi further strengthens Lumada’s presence in the market by incorporating energy solutions into the platform, allowing the company to provide even more advanced digital solutions to Hitachi’s customers to realize sustainable society.

Toshiaki Higashihara, President & CEO of Hitachi, said, “While COVID-19 has stalled various activities, we are pleased to be able to launch the new company as planned. Through this merger and acquisition, we have been able to acquire excellent assets that will help make Hitachi a truly global company.” 

“The first asset is the basis for promoting our Social Innovation Business worldwide. By combining the new company’s world-class power grid business with Hitachi’s Lumada solutions to create a new energy platform, and furthermore, by leveraging the new company’s global business model, we will be able to provide the best possible service in various industries and expand our Social Innovation Business globally.”

“The second asset is the basis for enhancing Hitachi’s global business management platform. The new company will feature a diverse group of talent and be a progressive

global operation. As we move forward with the integration of the new company with the rest of Hitachi Group, we will accelerate our transformation into a global company.”

“Moreover, we must address the most challenging SDG indicator of building a zerocarbon society with various measures including the use of renewable energies. Hitachi and Hitachi ABB Power Grids will work together to take on this challenge and contribute to the realization of a sustainable society,” he added.

Claudio Facchin, CEO, Hitachi ABB Power Grids, said, “Both Hitachi and ABB Power Grids have a rich legacy in technology and innovation that goes back over a century. Combining world-class power solutions with Hitachi’s leading open digital platforms presents us with new market opportunities and enables us to deliver greater customer value across the world.” 

“We remain committed to a sustainable future and will continue to facilitate secure, reliable and efficient electricity supply, as the partner of choice for a stronger, smarter and greener grid,” he added.

The purchase price of Hitachi ABB Power Grids’ 80.1% stake is approx. US$6.85 billion (approx. JPY740.0 billion)(4). Hitachi will consider to acquire the remaining 19.9% stake of Hitachi ABB Power Grids – making it a wholly owned subsidiary – after 2023. 

 

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