Written by: Salma El-Sakka
ABB and Mitsubishi Electric announced the signing of an agreement to establish a new joint venture focused on delivering low-voltage power distribution solutions in the Asia-Pacific markets. This strategic move aims to enhance the competitive presence of both parties in one of the most vital regions for electricity and distribution around the world, by combining the advanced technology and global network of one with the deep-rooted industrial expertise and capabilities of the other.
Under the terms of the deal, ABB will acquire a 51 percent majority stake in the new entity, in addition to full ownership of overseas sales operations associated with Mitsubishi Electric's low-voltage power distribution products outside Japan. The transaction is valued at approximately 79 billion Japanese yen, roughly equivalent to 495 million US dollars. The applicable terms include the possibility of ABB acquiring full ownership of the entity in the medium term, with the deal expected to close in the second half of 2027, subject to regulatory approvals and the fulfillment of customary conditions.
Ambitious growth targets and positive financial outlook
Management expects the joint venture to contribute positively to earnings per share starting from its second year of establishment, targeting an operating EBITDA margin of at least twenty percent within five years. These aspirations rely on integrating global sales networks with established commercial bases in the Asian market, particularly the Japanese market, which is one of the largest electricity markets globally.
In this context, Giampiero Frisio, President of ABB's Electrification Business Area, explained that Japan represents one of the most important global electricity markets, noting that this partnership combines Mitsubishi's strong domestic foundation with advanced technologies to strengthen the market position of both parties and deliver a broader range of advanced solutions to customers and employees alike.
For his part, Takayuki Tsuzuki, Senior Executive and Head of Factory Automation Systems Group at Mitsubishi Electric, pointed out that the company's power distribution business has contributed over many decades to supporting stable electricity and energy supplies in society. He emphasized that joining forces with ABB's global capabilities will provide greater value to customers and drive growth and development in the power distribution products sector.
Asset structuring and manufacturing capabilities
Mitsubishi Electric's power distribution business includes approximately 2,800 employees, with specialized manufacturing facilities in the Japanese city of Fukuyama and Hanoi, Vietnam. The production portfolio includes low-voltage circuit breakers, switchgear, motor starters, power measurement and monitoring devices, as well as uninterruptible power systems.
This step aligns with ABB's strategy based on producing close to key markets to enhance proximity to customers. Previous financial data for Mitsubishi's low-voltage power distribution sector show sales reaching approximately 102 billion Japanese yen, equivalent to about 640 million dollars, with strong profit margins supporting the success of this long-term strategic partnership.
