Shanghai Electric has set its sights on the robotics track for mergers and acquisitions.
Shanghai Electric announced on October 19 that the company's wholly-owned subsidiary Shanghai Electric Automation Group Co., Ltd. (referred to as "Automation Group") plans to acquire the company's controlling shareholder Shanghai Electric Holding Group Co., Ltd. (referred to as "Electrical Holding") in cash. 100% equity of Shanghai Ningsheng Industrial Co., Ltd. (referred to as "Ningsheng Industrial"), with a transaction price of 3.082 billion yuan.
The core asset of Ningsheng Industrial is Shanghai Fanuc Robot Co., Ltd. ("FANUC Robot" for short). It is understood that FANUC Robots occupies a pivotal position in the field of industrial robots. Together with ABB, KUKA, and Yaskawa, it is known as the "four major families of industrial robots" in the world. Shanghai Electric stated that the company will cooperate with FANUC Robotics in market and technology aspects to jointly develop a new generation of intelligent robots and enhance the company's market competitiveness in the field of intelligent manufacturing.
Planned purchase of FANUC robots
The announcement shows that Ningsheng Industrial is a shareholding management platform for industrial robot-related businesses and holds 50% of Shanghai Fanuc Robot Co., Ltd. ("FANUC Robot") and other assets. Japan's FANUC Co., Ltd. holds the other 50% stake in FANUC Robotics.
It is understood that FANUC Robots provides sales, installation and services of industrial robots, intelligent machinery and automated complete production systems to manufacturing users. Its main business includes industrial robots and peripheral products, including more than 260 types of industrial robots and standard peripheral products. The robot series can meet the various needs of industrial users for robots, as well as standard peripheral products such as grippers, positioners, walking axes, turntables, and pipeline packages; providing customers with complete intelligent manufacturing products and solutions, including intelligent robots software, vision application software, AI software and other products.
In terms of transaction price, taking June 30, 2024 as the evaluation base date, the evaluation value of 100% equity of Ningsheng Industrial is approximately 3.282 billion yuan. After negotiation between the parties, excluding the 200 million yuan that Ningsheng Industrial reviewed and approved on October 15, 2024, to distribute dividends to shareholders, the transaction price is approximately 3.082 billion yuan. The valuation method is the asset-based method, with a value-added rate of 6.20%, in which the assessed value-added mainly comes from the assessed value-added of assets such as FANUC Robotics' patents and software copyrights.
Robot assets are at the forefront, and high valuations are common. In comparison, the value-added rate of 6.2% in this transaction is not high.
Shanghai Electric explained that FANUC Robots has been operating well over the years. Since 2020, thanks to the rapid development of the new energy automobile industry and photovoltaic and other industries, domestic demand for high-performance industrial robots has increased. Both the revenue and profit level of Ke Robotics business have been improved.
However, in the past two years, the technology of the domestic industrial robot industry has been generally improved, the market has entered the stage of stock optimization, and competition in the robot industry has intensified. Fanuc Robot's operating conditions will begin to decline in 2023. Its management predicts that in the foreseeable future, Fanuc Robot's operating conditions will slowly and steadily recover, and the net profit margin is expected to return to pre-2021 levels. In this case, the income method valuation has certain uncertainties, while the asset-based method can reasonably reflect the value of all shareholders' equity of the unit being evaluated.
Financial data shows that in 2022, 2023 and the first half of 2024, Fanuc Robots achieved operating income of 7.59 billion yuan, 7.39 billion yuan and 3.08 billion yuan respectively, and net profits of 1.33 billion yuan, 1.05 billion yuan and 360 million yuan. From 2020 to 2022, FANUC Robotics' performance will increase significantly. Its revenue will increase from 3.785 billion yuan to 7.59 billion yuan, and its net profit will increase from 330 million yuan to 1.33 billion yuan.
will collaborate to develop a new generation of intelligent robots
After spending huge sums of money to acquire, how will Shanghai Electric and its subsidiary Automation Group collaborate with FANUC Robotics?
After the completion of this transaction, Fanuc Robotics will become an important joint venture in which the Automation Group indirectly holds 50% of the shares. The Automation Group will achieve further collaboration with Fanuc Robotics in terms of market development, product research and development, etc. This transaction integrates the superior resources of both parties, especially in key areas such as lithium battery production, photovoltaic cell production and aviation automation assembly. In the future, we will jointly carry out joint research on production line technology and design based on customer needs. It is expected that this acquisition will not only improve the automation group's integration level in key areas of intelligent manufacturing, improve the overall capabilities and core competitiveness of the automated production line, but also help accelerate the overall development of the company's automation industry and enhance the company's market competition in the field of intelligent manufacturing. efforts to further expand the company's future development space and improve the company's profitability.
In terms of market synergy, Shanghai Electric can introduce customer resources from emerging fields such as new energy and aerospace into Fanuc Robot’s customer network. Fanuc Robot can also help Shanghai Electric develop new businesses in consumer electronics, 3C and other intelligent manufacturing fields. expand.
In terms of innovation collaboration, both parties will leverage their rich experience in industrial robot applications and automated production line integration to jointly promote technological innovation in the automation industry, help both parties build more intelligent and efficient automation system solutions, and improve automated production lines. Equipment technical level.
Shanghai Electric specifically mentioned that the company will actively develop special robots and intelligent robot products, focus on special application scenarios and flexible manufacturing scenarios, and achieve full integration with FANUC Robot’s motion control and robot integration application technology advantages in the traditional automation field. Jointly build the unique competitive advantages of both parties in the field of automation. Further focus on advantageous application fields such as high-end equipment, energy, security, and national defense, and collaboratively innovate and develop new-generation intelligent robot products to build Shanghai Electric’s differentiated competitive advantage in the intelligent robot track.
