Rotork Shares Surge 67% on $5.5 Billion Takeover Agreement with ABB

Shares of British engineering firm Rotork (ROR.L) surged nearly 67% on Thursday following the announcement that it has agreed to be acquired by Swiss industrial technology company ABB (ABBN.S) in a recommended all-cash transaction.

Deal Details and Market Reaction

ABB's offer values Rotork at 503 pence per share, translating to an enterprise value of approximately $5.5 billion. The price represents a significant premium of around 60% to Rotork's three-month average share price, according to the announcement.

Under the terms of the agreement, Rotork shareholders will also be entitled to an interim dividend of up to 3 pence per share for the six-month period ending June 30, with no reduction in the offer value. The deal has received the unanimous recommendation of Rotork's board.

Strategic Rationale

ABB stated the acquisition is a strategic move to expand its automation business. The company described Rotork's portfolio of flow-control and instrumentation products as highly complementary to its own, enhancing its offerings for a range of industries.

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"ABB has followed Rotork over many years, and we admire the execution excellence, engineering quality, and customer trust that Rotork’s teams deliver each day," said ABB CEO Morten Wierod in a statement. He added that the company sees a "compelling strategic fit" that will accelerate Rotork's growth. ABB expects the acquisition to add about 3% to its group revenue and be immediately accretive to its Operational EBITA margin.

Financing and Next Steps

ABB plans to finance the transaction using existing cash resources and committed bank facilities. The company also noted that proceeds from the planned sale of its robotics business to SoftBank would further bolster its liquidity position.

The deal is contingent upon approval from Rotork shareholders and receiving customary regulatory clearances. The companies expect the transaction to close in the first half of 2027.