ABB Completes Tropos Acquisition

ABB Ltd. (ABB - Snapshot Report) has completed its previously announced acquisition of Tropos Networks Inc., a Silicon Valley-based company engaged in development and distribution of wireless technologies and products for distribution area communication networks. The acquisition strengthens ABB’s distribution automation business while expanding its scope in sectors like transportation, oil and gas, and mining.

Through this acquisition, ABB will enhance its skills in communication technologies while gaining expertise to develop new technologies. Further, ABB’s portfolio of fixed-wire and radio communication solutions will be enhanced through the addition of Tropos’ dependable, safe and scalable solutions for wireless communications.

Tropos’ technology and products for wireless IP (Internet Protocol) broadband networks are efficient for grids and important outdoor industrial applications. ABB will retain 55 employees of Tropos after the acquisition. Tropos main business is in North America and has its customers in more than 50 countries worldwide. Tropos acquisition is strategically sound for ABB as it allows it to attain its goal to develop the distribution automation business and expand its presence in North American market.

ABB provides complete solution for effective networks and smarter grid. These offerings are enhanced with the addition of Tropos.

Moving ahead, the emerging markets will be a significant growth driver for ABB. Demand in mature markets is also expected to improve. Customer capital expenditures have increased with the rise in commodity prices. Increased capacity in some later-cycle infrastructure-related businesses continue to exist. In many sectors, price stability has been attained and ABB has increased its prices to offset increasing raw material costs.

However, ABB Ltd's results are likely to be adversely impacted by macroeconomic weakness as more than 80% of the company's orders are derived from outside the US. A major competitor of ABB Ltd. is Siemens AG (SI - Analyst Report).

ABB Ltd. is a Zurich (Switzerland)based power and automation technology company. The company operates in approximately 100 countries, structuring its global organization into five regions: Europe, Americas, Asia, the Middle East and Africa.

Currently, we maintain a Zacks #3 Rank (short-term Hold recommendation) on ABB Ltd.