ABB Joint Venture with Mitsubishi Electric

ABB announced the creation of a joint venture with Mitsubishi Electric’s low-voltage power distribution product business, forming a new company focused on low-voltage solutions for Asian markets. For a consideration of JPY 79B (~$495M), ABB will acquire a controlling 51 % stake in the newly carved out company as well as full ownership of the related sales operations outside of Japan of Mitsubishi Electric’s low-voltage power distribution products. The transaction, which provides an option for full ownership by ABB in the mid-term, is expected to close in the second half of 2027, subject to regulatory approvals and other customary closing conditions.

The new company brings together ABB’s technology and global sales network with Mitsubishi Electric’s established market presence. It will transform the limited presence of ABB’s Electrification business area in Japan into a leading position in one of the world’s largest electrification markets, while strengthening ABB’s ability to grow across Asia-Pacific.

Giampiero Frisio, President of ABB’s Electrification Business Area, said: “Japan is one of the world’s most important electrification markets, where the people in Mitsubishi Electric’s low-voltage power distribution division have served customers and built deep expertise over many decades. This joint venture brings together that strong local foundation with ABB’s leading technologies and global reach, significantly strengthening our position in Japan and across Asia-Pacific. For customers and employees, it means continuity, greater opportunities, and access to a broader portfolio of low-voltage solutions. For ABB, this partnership brings together the best of both companies in a long-term commitment to growth in the region.”

Takayuki Tsuzuki, Mitsubishi Electric Corporation’s Senior Executive Officer, Group President, Factory Automation Systems, said: “Mitsubishi Electric’s power distribution business has continued to improve its technological and quality capabilities over the past 100 years. Currently, Mitsubishi Electric is well positioned in many product fields in Japan, supporting a stable supply of electricity and energy essential to society. Through this joint venture with ABB, Mitsubishi Electric will combine ABB’s global business foundation with the technologies, quality, customer base and sales channels it has cultivated over many years. By doing so, we aim to provide even higher value to our customers and further grow and develop our power distribution product business.”

Mitsubishi Electric’s power distribution business employs around 2,800 people, with dedicated manufacturing facilities in Fukuyama, Japan, and Hanoi, Vietnam. Its portfolio includes low-voltage circuit breakers, switches, motor starters, contactors and control devices, energy measurement and monitoring equipment, and uninterruptible power supply systems.

The joint venture advances ABB’s well-established local-for-local strategy, sourcing and producing close to customers in key markets. By combining ABB’s products and global sales network with Mitsubishi Electric’s customer relationships and local manufacturing footprint, the joint venture will create a broader offer for customers in Asia-Pacific, while giving ABB the opportunity to introduce proven technologies to Mitsubishi Electric’s customer base.

In FY2025 ending March 2026, Mitsubishi Electric’s Low-Voltage power distribution business achieved net sales of around JPY 102B (~$640M) with a low double-digit EBITDA margin. The related sales operations outside of Japan represent approximately 15 % of revenue. The transaction values the combined businesses at a total enterprise value (EV) of around $890M and implies an EV/Sales multiple of around 1.4 × and an EV/EBITDA multiple of around 11.1 × based on FY2025.

ABB expects synergies to improve the joint venture’s earnings, reducing the implied EV/EBITDA multiple to the mid- to high- single-digit range. ABB expects the joint venture to be accretive to earnings per share after year one and to achieve an operational EBITA margin of at least 20 % within five years, comparable with other ABB Electrification operations.

(Source: ABB Ltd.)