ABB, the cash-rich Swiss-Swedish engineering group, is seeking acquisitions in communications and software to boost its competitiveness as industrial customers demand increasingly interactive equipment.
The need for greater “connectivity” between machines spans the gamut of the ABB’s activities from massive high-voltage transformers to small electrical drives that improve energy efficiency.
The focal point for greater interactivity is in electricity distribution, where large suppliers such as ABB and its arch-rival Siemens are concentrating on “smart” grids.
Although still loosely defined, the term broadly means installing communications abilities into everything from modest home electricity meters to massive substations to give consumers and generators much greater control over energy use and production.
In June, ABB spent $1bn on Ventyx, a specialist US software provider working predominantly for utilities.
“Where we see the need for software, we will move into those areas as we did with Ventyx,” said Joe Hogan, ABB’s chief executive.
The group currently has $5.5bn in net cash, even after buying Ventyx and spending almost $1bn on raising its stake in its quoted Indian subsidiary.
In July, ABB stepped aside after being outbid by US rival Emerson for Chloride, the UK supplier of uninterruptible power systems, used in data centres, hospitals and industrial applications.
“Convergence is becoming increasingly important as suppliers try to bring together previously different sides of an industrial process, such as automation and power supply,” said Mr Hogan. “Likewise in smart grids, a lot is about communication and automation.”