SoftBank, ABB weigh China carve-out to save robotics deal

SoftBank Group and ABB are looking at separating the Chinese part of their $5.4 billion robotics deal after Beijing blocked it. Bloomberg reported on Saturday, citing people familiar with the matter, that the two companies and their advisers are searching for a fix after China's Office of the Working Mechanism for Foreign Investment Security Review stopped the takeover. The ruling hits Masayoshi Son's push into what SoftBank calls physical AI.bloomberg.com

Options on the table

Reuters Thomson Reuters Corporation ↘ 4.69%, citing the Bloomberg report, said a carve-out would put the China business into a separate entity with different owners. ABB is also looking at other options, including another buyer, and the China business could be valued at $2 billion to $3 billion. SoftBank is leading the effort, and the talks are preliminary and may not produce a deal, Investing.com reported. Bringing back ABB's earlier plan to spin off and list the robotics unit is another possibility. ABB declined to comment, and SoftBank did not respond outside business hours, according to Reuters.reuters.com+1

Separating the China business would be a major change. China is ABB's largest robotics market and makes up about 30% of the robotics business, which runs about 30 local companies with roughly 15,000 employees, Reuters reported. The unit's global headquarters in Shanghai includes a major research center and manufacturing base, according to BRICS Competition.bricscompetition.org+1

Why Beijing said no

In a statement, SoftBank said it received notice on November 4 that the review office had "prohibited the acquisition of ABB's robotics business in China." It added that it is "in close dialogue with ABB." ABB confirmed the decision on Thursday, November 5. The deal had cleared China's competition review in February. The Financial Times, via Swissinfo, reported that the security review, run by the National Development and Reform Commission, raised concerns that robotics data could be sent overseas and used to train AI models, including OpenAI's. SoftBank is a major OpenAI investor. Regulators also pushed to keep some manufacturing capacity in China.group.softbank+1

This is the second deal China has blocked this year, after Meta ↗ 0.84% was ordered in April to unwind its purchase of AI startup Manus, which was worth more than $2 billion, Reuters noted.reuters.com

Market fallout

SoftBank shares fell 11% in Tokyo on Friday amid a wider tech selloff. ABB shares ended the week down more than 5%, Investing.com reported. ABB had expected the deal to close by year-end. Citigroup ↗ 0.51% analyst Martin Wilkie estimated that the block cuts ABB's acquisition capacity in half, to about $5 billion. The robotics unit had $2.3 billion in revenue in 2024. It competes with Fanuc, Yaskawa Electric and Kuka, which is owned by Midea.investing.com