(ABB) ABB Acquires Lorentzen & Wettre to Strengthen Business

ABB Ltd. (ABB) has entered into an agreement to acquire Lorentzen & Wettre from ASSA ABLOY AB (publ) for a price of about $119 million (SEK 750 million). The acquisition is directed to solidify the company’s pulp and paper business.

Lorentzen & Wettre, based in the Kista district of Stockholm, Sweden, is a manufacturer of quality control, process optimization and test instrumentation for the pulp and paper industry. Its production facility is located in Kista and Kajaani, Finland and sales and services offices across Europe and in Canada, China, Japan, Singapore and the US. With about 190 employees, Lorentzen & Wettre will be incorporated in ABB’s Process Automation division.

The acquisition complements ABB’s product portfolio for the pulp and paper industry.  Revenues of SEK 307 million ($49 million) was generated by Lorentzen & Wettre in 2010 and it expects 2011 revenue to increase to SEK 335 million ($53 million). Subject to customary regulatory approvals, the transaction is expected to close in the second half of 2011.

ABB Ltd.’s power and automation technologies offer a solution for sustainable development, thus helping to shield the world’s resources. The company has a number of technologies for the solar power industry with a growing installed base. ABB Ltd. has witnessed improving signs in late-cycle power, with some recent large contracts.

However, ABB’s results are likely to be adversely affected by macroeconomic weakness as more than 80% of the company’s orders are derived from outside the US.  A major competitor of ABB Ltd. is Siemens AG (SI).

Based in Zurich, Switzerland), ABB is a power and automation technology company. The company operates in approximately 100 countries, structuring its global organization into five regions: Europe, Americas, Asia, the Middle East and Africa.

We maintain a Zacks #2 Rank (short-term Buy recommendation) on ABB Ltd.

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