ABB Acquires #2 Solar Inverter Firm Power-One for $1B

ABB moves decisively into solar. Consolidation heating up in the solar inverter market.

Eric Wesoff April 22, 2013

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

ABB acquiring Power-One (PWER), the number two global PV inverter company, for $1 billion is certainly a dramatic way to open Greentech Media's Solar Summit starting today in Phoenix, Arizona.

This breaking news comes a few weeks after Advanced Energy acquired REFUsol to become the number-three player in the PV inverter market.

ABB already plays in the inverter industry, with more than $100 million expected in 2013 sales. The acquisition of Power-One makes ABB the number-two global supplier of inverters and a credible threat to longtime inverter market leader SMA.

Consolidation is coming to an inverter market near you. In addition to today's ABB news and Advanced Energy's news, we've seen Satcon declare bankruptcy and Siemens withdraw from the inverter market. Also, SMA recently became a majority owner of Chinese supplier Zeversolar.

According to a release, "The boards of ABB and Power-One have agreed to a transaction in which ABB will acquire Power-One at $6.35 per share or approximately $1 billion equity value, which includes Power-One’s net cash of $266 million."

This is a strong premium over the $4.04 current price per share.

Power-One has more than 3,000 employees and had sales of approximately $1 billion in 2012 with $120 million in EBITDA.

ABB is a smart grid and power electronics behemoth that has pursued an aggressive acquisition strategy across smart grid sub-markets. Inverters have the potential to bridge the solar and smart grid world, making this a more than reasonable fit for ABB.

Power-One will be integrated into ABB’s Discrete Automation and Motion division.

GTM Research has just published a new 225-page report titled The Global PV Inverter Landscape 2013 that provides some insight into this dynamic $7 billion market. Here are some of the findings from the report:

GTM Research Top 10 Competitively Positioned PV Inverter Companies
1. SMA
2. Power-One (now owned by ABB)
3. Schneider Electric
4. SunGrow
5. Advanced Energy (REFUsol)
6. ABB
7. TMEIC
8. KACO New Energy
9. Chint Power
10. Fronius

FIGURE: Global PV Inverter Taxonomy 2013

Source: The Global PV Inverter Landscape 2013

MJ Shiao, GTM Research's inverter specialist, writes, "Power-One provides ABB a wealth of operating experience and the complete suite of inverter solutions it has been targeting, while ABB lends its global footprint, purchasing power, and most importantly, bankability in a tumultuous market that is sure to see more consolidation events soon."

"We had predicted consolidation in the market and ABB as a potential buyer; however, this deal shows that every supplier is on the table. The purchase of Power-One, the second-ranked inverter company globally, and recent acquisition of REFUsol by competitor Advanced Energy shows that aggressive deal-making will quickly strengthen top players while leaving smaller and less well-capitalized suppliers much more susceptible to market exit."

The solar inverter market faces similar dynamics to those at play in the PV module market. There is overcapacity amidst falling prices and shifting market geographies and incentives.

But ABB, as one of the four horsemen of the grid, is a deep-pocketed, bankable multinational with a large R&D budget. It's not a bad home for Power-One.

Senior Editor Stephen Lacey asks Larry Truong, Director of Business Development for Renewable Energy Solutions at Power-One, about reducing system costs: