ABB agrees to buy 51% of Mitsubishi's low-voltage business
Key Facts
ABB announced on 20 October 2026 an agreement to acquire a controlling 51% stake in a company to which Mitsubishi Electric's low-voltage power distribution products business will be transferred. The company said the consideration totals 79 billion yen, or about $495 million, under an agreement to establish a joint venture between the two parties. The consideration also includes ABB taking full ownership of sales operations related to these products outside Japan. The move aims to strengthen the company's presence in the Japanese market and expand its reach across Asia-Pacific markets. ABB said in its quarterly results statement that "this transaction will make us the low-voltage market leader in Japan".
The deal puts an enterprise value of approximately $890 million on the combined businesses covered by the agreement, according to ABB's statement. These businesses generated net sales of approximately 102 billion yen in the fiscal year the company calls 2025, which ended in March 2026. That is equivalent to about $640 million, according to the approximate figure in the joint venture announcement. Related sales operations outside Japan account for about 15% of revenue, and ABB will take full ownership of those operations under the agreement. The acquisition therefore combines a controlling stake in the company that will house the products business with ownership of its related overseas sales operations.
The businesses covered employ about 2,800 people, according to ABB, and have a manufacturing footprint spanning Japan and Vietnam. The manufacturing facilities are in Fukuyama, Japan, and Hanoi, Vietnam, within the scope of the businesses included in the announced agreement. The product range includes low-voltage circuit breakers and switches used in power distribution, according to the company's statement. It also includes motor starters, contactors and control devices, which ABB listed as part of the portfolio covered. The agreement thus focuses on the low-voltage power distribution products business and its related operations, as part of the company's announced expansion in Asian markets.
On operations, ABB links its plan to improve the venture's profitability to expanding sales through both parties' sales channels, according to its third-quarter results statement. The plan includes introducing ABB technologies to Mitsubishi Electric's customer base, broadening the range of products available to those customers through the existing commercial relationship. The company also listed "manufacturing optimization" among the measures it intends to use to improve the business's profitability after establishing the venture. It targets an operational earnings margin before interest, taxes and amortization of intangible assets of at least 20% within 5 years. It also expects the joint venture to begin contributing to earnings per share after the first year, according to the agreement announcement.
The deal announcement coincided with ABB's results for the third quarter of 2026, which showed orders rising to $12,055 million. Orders increased 40% year on year, according to the results statement, as the group's Asian expansion plans were accompanied by growth in incoming business. Quarterly revenue rose to $9,701 million over the same period, according to the figures announced by the company. Revenue grew 14% from the corresponding period a year earlier, compared with the larger increase in orders. ABB said the data center sector recorded triple-digit order growth during the quarter, in the results announced alongside the agreement.
However, quarterly net profit fell to $1.18 billion, according to Dow Jones Newswires' report on ABB's results carried by MarketScreener. That compared with net profit of $1.21 billion in the corresponding period a year earlier, despite growth in revenue and orders during the quarter. Profit also fell short of analysts' expectations of $1.42 billion, according to a company-compiled consensus cited by the news agency. In European morning trading on 20 October 2026, ABB shares fell 5.5%, according to Dow Jones Newswires. The decline coincided with a broader selloff in artificial intelligence-related stocks, during a session that saw the announcement of the results and the agreement with Mitsubishi Electric.
ABB expects to complete the deal in the second half of 2027, according to the timetable in its announcement. Closing remains subject to obtaining the necessary regulatory approvals for the agreement, under the terms announced by the company. Completion also depends on satisfying customary closing conditions, alongside those approvals. The agreement includes an option allowing ABB to take full ownership of the joint venture over the medium term, following the acquisition of the agreed controlling stake. Under the announced structure, establishing the joint venture and purchasing the related sales operations outside Japan will precede any potential transfer of full ownership of the venture to ABB.