SoftBank and ABB weigh separating Chinese robotics operations

SoftBank Group and ABB are examining whether to exclude Chinese operations from their $5.4 billion robotics transaction after Beijing prohibited the acquisition, leaving the companies searching for a revised structure that could secure regulatory clearance.

The Japanese investment group and Swiss engineering company are considering placing ABB Robotics’ China business into a separately owned entity while allowing SoftBank to acquire the remaining operations. Discussions remain preliminary, and there is no assurance that the proposed separation will overcome China’s objections or produce a completed transaction.

SoftBank is understood to be driving the restructuring discussions with ABB and their advisers. The companies have not publicly confirmed a carve-out proposal. Both declined to comment on the reported deliberations, although SoftBank has acknowledged continuing talks with ABB over the transaction.

China’s Office of the Working Mechanism for Foreign Investment Security Review, operating under the National Development and Reform Commission, prohibited the acquisition of ABB’s robotics operations in China. The decision, communicated to SoftBank this week, interrupted a sale agreed in October 2025 and valued at approximately $5.4 billion.

SoftBank said it had received notification of the prohibition and was working constructively with ABB. The Chinese authorities have not publicly detailed their reasons for rejecting the transaction. Questions surrounding the protection of industrial technology and data have nevertheless become central to discussions about a possible alternative ownership arrangement.

A separation would be commercially significant because China is ABB Robotics’ largest individual market. Its manufacturing and research operations in Shanghai form an important part of the business SoftBank originally agreed to purchase. Removing those assets could change both the economic value and strategic appeal of the acquisition.

China accounts for roughly 30 per cent of the robotics business, although the precise share varies with the period and measure used. More than 90 per cent of robots supplied to ABB’s Chinese customers are manufactured locally, illustrating the extent to which its operations are integrated into the country’s industrial supply chains.

The proposed structure would therefore need to address more than the legal ownership of a subsidiary. Manufacturing facilities, research activities, intellectual property, commercial relationships and arrangements for handling operational information could all affect how the businesses are divided. No agreed terms governing those matters have been disclosed.

ABB is separately examining alternatives, including finding another purchaser for the robotics division. One possible sale scenario has been associated with a valuation of $2 billion to $3 billion, substantially below the original SoftBank transaction price. That figure remains an informal possibility rather than a confirmed offer or independent valuation.

Returning to a previously considered stock-market separation is another potential route. ABB had originally intended to spin off the robotics division before agreeing to sell it to SoftBank. A listing would introduce different execution and market risks, particularly after the companies signed a binding acquisition agreement.

The regulatory intervention has complicated ABB’s capital allocation plans. The company had expected to use proceeds from the divestment to support acquisitions elsewhere in its business. Citigroup analyst Martin Wilkie estimated that the Chinese blockage could reduce ABB’s available acquisition capacity to approximately $5 billion, roughly half the amount previously envisaged.

ABB shares declined on Friday, extending their losses for the week to more than 5 per cent. SoftBank shares fell about 11 per cent in Tokyo amid a broader technology-sector sell-off, although movements in its share price cannot be attributed solely to the robotics decision.

For SoftBank, the proposed purchase was intended to strengthen its position in robotics systems that combine artificial intelligence with physical machinery. The group has identified this field as an investment priority, making access to ABB’s engineering capabilities and established industrial customer base an important consideration.

The robotics division generated approximately $2.3 billion in revenue in 2024 and employed around 7,000 people. Its manufacturing footprint includes facilities in China, Sweden and the United States, serving industrial customers alongside competitors such as Fanuc, Yaskawa Electric and Kuka.

The original acquisition agreement, signed on 8 October 2025, specified a purchase price of $5.375 billion and required regulatory approvals in several jurisdictions, including China. The Chinese security review was distinct from competition approval, demonstrating that clearance under one regulatory process did not settle the separate investment-security assessment. ABB had previously targeted completion of the divestment during 2026, subject to the remaining necessary approvals and other applicable customary closing conditions.