BBC-Brown, Boveri and Asea Announce Merger
BADEN, Switzerland (AP) _ BBC-Brown, Boveri & Co. AG of Switzerland and Asea AB of Sweden, two large engineering companies, said Monday they would merge to form a worldwide industrial group.
The new company, Asea Brown Boveri, will have projected annual sales of $15.3 billion and a combined workforce of about 160,000, according to a statement released by Brown Boveri.
Each company would retain 50 percent ownership under the agreement, which is scheduled to take effect on Jan. 1 pending shareholder and government approval.
Both companies will remain publicly listed, but the new company is to be created through an exchange of assets and will not be listed on any stock exchange.
The merged company will play a leading role in the power generation, transportation and industrial automation businesses and is expected to spend a significant amount of money on research in fields including superconductors and superconductivity.
The statement called the combination a ″major contribution to the strengthening of European industry″ and said the merger was aimed at boosting the new company’s market position in the European Community and North America.
Both firms complement each other in technology, product lines and worldwide market presence, the statement said.
European sales account for 65 percent of the companies’ combined revenue, Asia and Australia for 15 percent, and the United States for 10 percent, said BBC Chairman Fritz Leutwiler at a press conference.
Percy Barnevik, Asea’s president and chief executive officer, said in Stockholm that the merger will strengthen Asea’s presence in the European Community and in overseas markets.
The Stockholm-based conglomerate said the merger came at a time of stagnation in the electrotechnical field while the need for costly research continues to grow.
Asea will retain its minority interests in appliancemaker Electrolux, in Esab, the world’s largest maker of welding equipment, and in the investment company Sila AB. It also will keep several small wholly owned units.
BBC said it will ask shareholders to approve an equity issue that, with convertible debt and warrants, will contribute about $510 million to the new company.
Asea, parent of 350 companies and 71,000 employees, is a leading producer of industrial robots. The company has additional manufacturing and financial services operations.
BBC, with 94,000 employees, is involved in power generation and distribution, electronics and transportation.