Hitachi to acquire robotic systems integrator JR Automation for $1.4 billion

Hitachi has entered into a definitive contract for the acquisition of the robotic system integrator business mainly operated by an American headquartered company, JR Automation.

Hitachi will conduct the acquisition with Crestview Partners.

Subject to the terms and conditions of the contract, Hitachi will acquire JR Automation, which builds production lines and logistics systems using industrial robots.

As a result of this acquisition, Hitachi will enter the robotic systems integrator business in North America, which is a region that is expected to see a high rate of growth.

The acquisition is expected to be executed by the end of 2019, subject to the satisfaction of certain regulatory and other customary closing conditions.

In the industry sector, Hitachi will continue to accelerate the global rollout of the robotic systems integrator business, together with the acquisition of KEC Corporation, a Japanese robotic system integrator, for which an acquisition contract was completed by Hitachi Industrial Equipment Systems in March 2019.

In 2017, Hitachi acquired Sullair, an American manufacturer and seller of air compressors, marking a full-scale entry into the North American industrial product business.

With the acquisition of JR Automation, Hitachi will acquire JR Automation’s customer base in the OT domain, along with advanced robotic SI technologies, know-how, and resources.

Additionally, the acquisition of JR Automation will allow Hitachi to further expand its Lumada Solution business, globally.

Lumada is Hitachi’s advanced digital solutions, services, and technologies business, which helps customers and management turn their workplace data into insights to drive digital innovation.

In recent years, in the manufacturing and logistics fields, there has been a growing demand for automation because of decreased working age populations, intensifying global competition, and further quality improvement requirements to prevent significant product recalls.

As a result, the global robot-based automation market continues to expand, with a high average growth rate exceeding 10 percent per year.

Since its establishment in 1980, JR Automation has been involved in the robotic systems integrator business, building production lines that incorporate industrial robots, predominantly in North America but increasingly around the world.

It is capable of designing, building, and adjusting not only specific lines but entire production lines, and demonstrates “unique strengths and expertise in robot-based assembly and welding processes”, according to Hitachi.

As such, JR Automation has a robust customer base across a wide range of industries, including the automotive, aerospace, e-commerce, and medical device industries.

In Hitachi’s industry sector, as part of its efforts to become a “Best Solution Partner” for industrial customers, Hitachi is expanding its Lumada Solution business by leveraging its combined strengths in products, operations technology, and information technology.

To further strengthen the business in the OT domain, Hitachi Industrial Equipment Systems executed a contract in March 2019 for the acquisition of KEC, a Japanese robotic system integrator.

The acquisition of JR Automation will allow Hitachi to acquire additional advanced technologies, know-how, and resources in the robotic SI business that JR Automation has cultivated over many years, in addition to a customer base across a broad range of industries.

Meanwhile, JR Automation will use Hitachi’s advanced research and technology and resources, aiming to add value to its robotic systems integrator business by utilizing data.

In the Industry Sector, Hitachi will roll out a robotic systems integrator business by leveraging the resources of JR Automation, with its customer base in the US and other regions globally, in addition to Hitachi Industrial Equipment Systems and KEC, with their customer mainly bases in Japan and other parts of Asia.

As a result of these initiatives, Hitachi will expand Lumada Solutions globally.

Specifically, 4M data from the workplace, obtained by the robotic systems integrator business, will allow for Lumada Solutions to expand across multiple fields, including visualization, manufacturing optimization, logistics, and maintenance.

In this way, Hitachi seeks to contribute to improving the value of our customers’ businesses by seamlessly visualizing and analyzing businesses as a whole, from the workplace all the way through to management.

Masakazu Aoki, executive vice president, Hitachi, says: “I am extremely pleased that we have reached an agreement on the acquisition of JR Automation.

“Securing JR Automation’s robotic systems integrator business in North America is an important milestone for us.

“By providing customers with new value that combines Hitachi’s products, OT, IT, and advanced digital technologies, we will accelerate the global rollout of our Social Innovation Business.”

Bryan Jones, CEO, JR Automation, says: “We are very excited to partner with Hitachi to take this next step in the company’s evolution.

“With our combined capabilities, Hitachi and JR Automation will be a uniquely qualified global leader in next generation smart manufacturing, and this partnership will enable us to continue to drive tangible value creation for our customers through innovative custom solutions.

“On behalf of everyone at JR Automation, I would like to thank the team at Crestview Partners and outgoing chairman Mike DuBose for their outstanding partnership and leadership during this period of dramatic global growth for JR Automation.”

The acquisition price for JR Automation is $1,425 million on a cash-free debt-free basis.

The total purchase price is subject to a possible post-closing adjustment. For example, in the event of certain fluctuations in JR Automation’s net working capital or net liabilities.