SoftBank and ABB Weigh Carving Out China Unit to Rescue $5.4 Billion Robotics Deal

The idea under discussion is a separate Chinese entity with different ownership, which would keep SoftBank from controlling the assets that concern Chinese authorities. SoftBank is leading the effort, according to Bloomberg, which said the talks are preliminary and may not produce an agreement. ABB declined to comment when Reuters asked, and SoftBank did not respond outside business hours.

A carve-out is difficult because China is the robotics division's largest single market. Reuters said China accounts for about 30% of ABB's robotics business. The division also runs a large manufacturing and development site in Shanghai. Any rescue would have to separate a large share of the unit's revenue and production from the parts SoftBank wants for its push into AI-driven robotics.

China's foreign investment security review authorities blocked the acquisition on Thursday and gave no official reason. According to Bloomberg, a separately owned Chinese business could ease regulators' concerns about industrial technology and data leaving the country as competition over AI grows.

ABB is also considering other options. Bloomberg said these include selling the robotics business to another buyer, possibly at a valuation of $2 billion to $3 billion, well below SoftBank's price. Another is to revive ABB's earlier plan to spin off the division, with Switzerland and Sweden as possible listing venues. People familiar with the matter told Bloomberg that a stock market listing could be hard to arrange now that a sale agreement has been signed.

The block has a cost for ABB. Citigroup analyst Martin Wilkie estimated it would roughly halve the company's capacity for acquisitions, to about $5 billion, Bloomberg reported. ABB had expected the sale to close before the end of the year. Its shares fell on Friday and ended the week more than 5% lower. SoftBank's shares dropped 11% in Tokyo on Friday during a wider technology sell-off after the US midterm elections.

ABB's robotics division had revenue of $2.3 billion in 2024, about 7% of group sales, and employs around 7,000 people. It makes robots in China, Sweden and the United States, and competes with Japan's FANUC and Yaskawa Electric and with Midea-owned Kuka. Across all its businesses, ABB has about 30 local companies in China with around 15,000 employees in nearly 130 cities, Reuters said.

This is the second foreign technology deal Beijing has stopped this year, after it ordered Meta in April to unwind its acquisition of AI start-up Manus, a deal worth more than $2 billion. Neither SoftBank nor ABB has confirmed that a carve-out is being considered.