SoftBank and ABB Weigh China Carve-Out to Save Robotics Acquisition

Following a recent decision by Chinese regulators to block the acquisition of ABB’s local robotics division, SoftBank Group Corp. and ABB Ltd. are reportedly evaluating a strategic carve-out to salvage their $5.4 billion transaction. The move comes after China’s Office of the Working Mechanism for Foreign Investment Security Review prohibited the sale of the Swiss firm's Chinese robotics assets earlier this month, citing security concerns.

This regulatory intervention has created a significant hurdle for the deal, which was originally intended to bolster SoftBank’s expansion into physical AI. China represents a critical market for ABB, accounting for approximately 30% of its robotics revenue and maintaining an extensive network of local manufacturing and research facilities. By potentially separating the Chinese business into a distinct entity with different ownership, the companies hope to satisfy Beijing’s requirements while allowing the remainder of the global acquisition to proceed.

While both companies have confirmed they are in close dialogue and working constructively to address the situation, neither has officially announced a finalized restructuring plan. Industry analysts suggest that the regulatory block reflects Beijing’s increasing scrutiny of foreign investments in frontier technologies, particularly those involving data-sensitive sectors like robotics and artificial intelligence.

Beyond a carve-out, reports indicate that ABB is considering alternative options, including the possibility of finding a different buyer for the Chinese unit. As the situation remains fluid, the future of the broader agreement hinges on whether the parties can successfully navigate these complex geopolitical and regulatory challenges without abandoning the deal entirely.