SoftBank, ABB Consider China Robotics Carve-Out to Save Deal

What changed

SoftBank Group and ABB are considering carving out ABB Robotics’ Chinese business to save SoftBank’s proposed $5.4 billion acquisition of the unit.

China’s Office of the Working Mechanism for Foreign Investment Security Review halted the deal on Thursday. The carve-out talks focus on ABB Robotics’ largest single market.

Why it matters

The transaction is no longer simply a $5.4 billion purchase. It is now a question of whether SoftBank can buy the robotics business while separating out the part most exposed to Chinese regulatory scrutiny.

That would leave the companies trying to redesign the deal around China rather than abandon it altogether. But China’s robotics operation is not a minor side business, since it is ABB Robotics’ largest single market. Removing it could change the value and shape of what SoftBank is seeking to acquire.

Whether the carve-out can be agreed or would satisfy Chinese regulators remains unknown. The talks are private and based on people familiar with them, so the next meaningful signal will be whether the companies announce a revised transaction or the review process produces a new decision.