) announced that it intends to acquire Mountain View, California
based Los Gatos Research. The financial terms of the deal were
not disclosed. Through this acquisition, ABB will be adding to
its portfolio of high performance gas analyzers providing
real-time measurement of trace gases and isotopes for research
and environmental monitoring.
Los Gatos Research (LGR) is one of the leading developers of
innovative laser-based measurement strategies for non-destructive
analysis of gases, liquids and solids. The company offers high
performance analyzers for measuring trace constituents of gases
Los Gatos analyzers use a unique laser absorption technology
called Off-Axis Integrated Cavity Output Spectroscopy (OA-ICOS),
which is a patented technique of the company. This technique
provides superior performance, value and reliability compared to
the traditional CRDS technology.
The acquisition of Los Gatos is a strategic move by ABB and
comes at a time when the depletion of oil and gas reserves is
pushing up demand for oil & gas exploration projects
worldwide. Therefore, demand for these technologies will continue
to grow in both emerging and mature markets and should boost
ABB's revenues going forward.
Industrial, utility and energy markets are expected to rapidly
expand further and the industrializing economies will help to
offset some of the declines in the already developed regions.
Energy demand in developing nations (Non OECD) will rise 65%
by 2040 compared to 2010, as a result of the growing prosperity
and growth in these regions. Overall, global energy demand will
grow 35%, even with significant efficiency gains, as the world's
population expands from about 7 billion people today to nearly 9
billion people by 2040, led by growth in Africa and India.
Therefore, Los Gatos should help ABB enhance its offerings and
complete the already-existing and new projects in an efficient
and effective manner. This is because, by adding Los Gatos
research to its business, ABB will have a completely new line of
business that is very critical to the clients having large scale
projects in the industries such as oil & gas production and
transportation, combustion, emissions, power generation and
With the increasing activity in the energy sector globally,
there has been consolidation in the sector. For instance,
companies such as
Chicago Bridge & Iron
), dealing with the energy projects at various stages of their
life cycle have made a number of acquisitions to be
In the recent past, Chicago Bridge & Iron announced that
it has entered into an agreement to acquire E-Gas Technology
). Similarly, KBR had also acquired Houston-based Energo
Engineering that provides Integrity Management and advanced
structural engineering services to the offshore oil and gas
Los Gatoswill be a part of ABB's Process Automation Division.
In the latest reported quarter, revenues from this division grew
marginally by 1% while orders declined 1%. During the quarter,
order growth in mining and marine was fully offset by declines in
metals and pulp and paper. Further, oil and gas orders were flat,
with growth in base orders offset by lower large orders.
ABB currently has a Zacks Rank #3 (Hold).
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