ABB Ltd. (ABB) recently completed the divestiture of Power-One’s Power Solutions business to Bel Fuse Inc (BELFA and BELFB) – a manufacturer, distributor and marketer of power supply products – for $117 million. The decision to vend the Power Solutions business was announced in Apr 2014, as part of ABB’s strategy to streamline its portfolio.
Post the acquisition of Power-One in 2013, the power solutions segment was integrated into ABB’s business. However, the business did not generate the desired results as it failed to complement ABB’s main as well as other businesses. However, post the divestiture, Power-One’s solar inverter business will remain in ABB’s portfolio. Also, this business will support ABB's plans of becoming a leading supplier of solar inverters globally.
The divestiture is a win-win situation for both ABB and Bel Fuse. While the divestment will allow ABB to concentrate on its solar power inverter product line, the inclusion of the power solutions business will complement Bel Fuse’s existing line of business.
Power-One’s Power Solutions business has been in operation since the past four decades and is a leader in high-efficiency and high-density power conversion products across varied industries including data storage, networking, industrial, transportation and network power systems. Power Solutions primarily designs, manufactures and sells standard products as well as application-specific customized products from its facilities in the U.S., Slovakia, Switzerland and China.
ABB’s leading portfolio in power and automation, global footprint and service organization makes it a natural player in solar PV. ABB develops solutions for the solar PV industry and is on track to generate solar inverters sales of over $100 million in 2013. Solar inverters are one of the fastest-developing technologies in power electronics, requiring substantial research and development (R&D) resources. In 2012, ABB invested about $1.5 billion in R&D overall.
ABB currently has a Zacks Rank #5 (Sell). Some better-ranked companies in the sector include Emcor Group Inc. (EME), Sterling Construction Co. Inc. (STRL) and Tutor Perini Corporation (TPC). All three carry a Zacks Rank #2 (Buy).