GENEVA (AP) — Swiss power grid supplier ABB Ltd has agreed to buy Britain's Chloride Group PLC, potentially setting up a bidding war with rejected suitor Emerson Electric Co.
ABB, the world's biggest supplier of power grids, said Tuesday it has agreed an 864 million pound ($1.25 billion) cash deal with London-based Chloride.
Chloride had rejected a 723 million pounds ($1.1 billion) preliminary offer from St. Louis-based Emerson in April as too low.
Under the ABB-Chloride deal, Chloride investors will receive 325 pence per share in cash — a 56 percent premium to the British company's closing price the day before Emerson made its approach.
The acquisition of Chloride, which provides backup power supply systems, is subject to regulatory approval.
"The combination of Chloride's strong position in the fast-growing medium- to high-power UPS business with ABB's global reach and complementary power and automation offering provides significant growth opportunities for both," said ABB's CEO Joe Hogan.
Analysts welcomed the announcement as an opportunity for ABB to improve its position in the market for uninterruptible power supply systems. But Helvea's Alessandro Migliorini noted the high price ABB will pay for Chloride, which trumps an earlier offer of 275 pence per share made by St. Louis-based Emerson Electric Co.
ABB shares were up 0.8 percent at 19.38 Swiss francs ($16.72) on the Zurich exchange.