ABB Wins Automation Contract - Analyst Blog

By Zacks | February 13, 2013 AAA

ABB Ltd. (ABB) announced its plan to acquire APS Technology Group (APS), based in San Diego. With this acquisition the company adds optical character recognition (OCR) and gate automation techniques to its portfolio which will enable it to benefit from the rising demand for containerized shipping globally. Safety, productivity and efficiency of port operations are enhanced with these new techniques. Terms of the transaction are not disclosed.

After the completion of the acquisition APS will be included in ABB's Crane and Harbor automation business. Total employee strength of APS is 50 in two of its California offices, in San Diego and in Long Beach. ABB does not plan to make any major change to APS' organizational structure.

Due to the growing demand for containerized shipping, manual handling of containers in ports and terminals is now moving towards fully automated systems. Therefore, with the implementation of the OCR technology to containers, trucks and gates ABB will be able to better handle the automated process of ship to gate process. This process will increase productivity and reduce the number of accidents ultimately saving time and money for ABB

ABB Ltd. leads the market in crane automation techniques, providing a variety of automation and electric grid products and services to marine industries. ABB's shore-to-ship electric power for idling ships' engines at ports to lower cost and emissions. The acquisition of APS is a strategic move by ABB, as it expects the global terminal automation market to double in the next five years.

ABB also is one of the leading player in the Power and Power Systems supply products. The company on a continuous basis receives contracts from the leading power projects globally, which is also the major revenue driver for the company.

Over the past three years, ABB has made an investment of nearly $11 billion in North America, in order to become a leading player in the power and automation technologies segment. In addition, now with the combination of Thomas & Betts' network of more than 6,000 distributor locations and wholesalers, ABB's market reach in North America alone is expected to reach to about $24 billion. This is in line with the company's long-term (2015) growth and profitability targets.

In other regions, such as Europe and Asia, ABB intends to capture the market through its already well established distribution channels.

ABB Ltd. currently has a Zacks #4 Rank (Sell). Its close rivals such as Tyco International Inc. (TYC) has a Zacks Rank #1 (Strong Buy) and Siemens AG (SI) has a Zacks Rank #2 (Buy).

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