China's Office of the Working Mechanism for Foreign Investment Security Review notified SoftBank on November 4 that it had prohibited the company's acquisition of ABB's robotics business in China, forcing both sides to restructure a deal valued at $5.4 billion3,2.
SoftBank and ABB are now examining a carve-out of the Chinese operations, with the companies considering a separate entity under different ownership to keep the wider transaction alive. SoftBank said both parties are "working constructively on the transaction" and will announce any decisions that require disclosure.
Scale of the China exposure
China is ABB Robotics' largest market, accounting for about 30 percent of the division's business, according to Reuters. The unit operates about 30 local companies in China with around 15,000 employees across nearly 130 cities. ABB is also considering finding another buyer for the China business, which could potentially be valued at $2 billion to $3 billion, though the discussions remain preliminary and may not produce an agreement.
ABB's robotics business generated $1.7 billion in revenue through the first nine months of the year and posted a net loss of $23 million. ABB is described as one of the world's leading manufacturers of robotic arms, alongside Fanuc, Yaskawa, and Kuka, according to the Association for Advancing Automation.
SoftBank's balance sheet under pressure
The regulatory setback lands as SoftBank's financial position is stretched. SoftBank Group released its quarterly earnings on November 9, reporting that net interest-bearing debt climbed to 10.8 trillion yen (about $68.2 billion), up from 6.6 trillion yen a year earlier1. The company's share price has fallen 23 percent year-to-date. Bloomberg reported that SoftBank swung to a quarterly loss after AI-related concerns hit tech stocks4.
SoftBank has pursued a series of large acquisitions spanning AI chips, computing infrastructure, large models, and robotics in recent years, while raising cash by selling assets such as T-Mobile USA shares. Investors are watching how Arm's weakening share price affects SoftBank's financing capacity and how OpenAI's IPO timeline transmits pressure to its debt-servicing obligations.
ANALYSIS The China block strips a material portion of the asset SoftBank agreed to buy: if the carve-out proceeds and a separate buyer takes the China operations at the reported $2 billion to $3 billion range, the residual deal would cover roughly half to two-thirds of the original $5.4 billion valuation. The outcome will test whether SoftBank can absorb a restructured robotics acquisition while its net interest-bearing debt has risen from 6.6 trillion yen to 10.8 trillion yen and its equity cushion from Arm and OpenAI holdings faces market headwinds.