Rotork agrees £4bn deal with ABB
Bath-headquartered specialist oil and gas valve manufacturer Rotork plc is set to be acquired by Swiss engineering group ABB Ltd for £4.14bn.
ABB announced this month that it had agreed the terms of a recommended cash offer for the entire issued and to-be-issued share capital of Rotork.
The transaction is expected to further strengthen ABB’s focus on electrification and automation and expand its Automation business area’s offering for large and complex infrastructure and industries.
Under the terms of the offer, each Rotork shareholder would be entitled to receive 503 pence in cash per Rotork share, representing a premium of around 60% to Rotork’s latest 3-month average share price. The transaction implies an enterprise value of around $5.5 billion.
Rotork shareholders will also be entitled to receive an interim dividend for the period to 30th June, 2026 of up to three pence per Rotork share (the “Permitted Dividend”) without any reduction to the offer value.
Compelling strategic fit
ABB says that Rotork’s business with well-established positions in mission-critical flow control and instrumentation is highly complementary to the group’s automation portfolio and will strengthen ABB’s position at the field-device layer.
Through this proposed combination, Rotork would be able to benefit from ABB’s global scale, market reach, service presence, and digital and technology capabilities.
Upon completion of the deal, Rotork is expected to operate as a separate division under a strategic growth mandate within ABB’s Automation business area.
Rotork recorded 8% average annual organic revenue growth in 2022 to 2025 serving segments including oil & gas, chemical, process and industrial, including data centers, as well as water and power. With 2025 revenues of around $1 billion and 2025 adjusted operating profit margin of 24.6%, Rotork is expected to add around 3% in revenues to ABB and be immediately accretive to ABB’s Operational EBITA margin. As part of ABB’s Automation business area, Rotork is also expected to add around 12% to the business area’s revenues, supporting its growth ambitions, and be immediately accretive to the business area’s Operational EBITA margin.
Morten Wierod, Chief Executive Officer of ABB said, “ABB has followed Rotork over many years, and we admire the execution excellence, engineering quality, and customer trust that Rotork’s teams deliver each day. We are convinced of the compelling strategic fit of the transaction that will expand our automation offering at the field device layer generating significant value for customers, employees, and shareholders of both companies. As part of ABB, Rotork is expected to accelerate its growth and value creation while preserving its entrepreneurial spirit and customer proximity that makes this business so successful. With our strong balance sheet ABB has room for additional M&A and execution of its announced share buyback program.”
Dorothy Thompson, Chair of Rotork added, “The Board believes that the offer from ABB reflects the high quality of Rotork and recognises the significant progress delivered through the successful implementation of our Growth+ strategy, whilst providing an attractive opportunity for Rotork shareholders to accelerate the value creation of the Company’s strong future prospects, in cash at closing.
“The combination brings together two companies whose purposes are closely aligned, with a shared focus on automation and electrification to enable more sustainable and efficient operations. The Board also believes that ABB’s decentralised operating model and commitment to run Rotork as a separate division will benefit the Group’s business, employees and wider stakeholders. As a result, the Board has unanimously agreed to recommend the offer to Rotork shareholders.”
Pictured above: Image by Michal Jarmoluk from Pixabay
