The deal was signed to cater to the growing needs of power grids worldwide for safe, dependable and state-of-the-art electrical substations. It inked a partnership deal with engineering and construction firm Fluor Corporation FLR. The Power Grids business signed three important deals last week. The company claims that this step will streamline operations and raise shareholder value. Per The Wall Street Journal, two of ABB’s top shareholders - Swedish activist fund Cevian Capital and U.S.-based Artisan Partners - were urging the company to spin off its Power Grids business. Importantly, ABB indicated that the restructuring will likely include a strong shift toward digital offerings. It also announced plans last week to buy back up to $3 billion of its shares from 2017 through 2019.ĪBB said it will continue its active portfolio management plan, including strategic acquisitions as well as divesting non-core businesses. Further, it raised its targeted cost savings (under a plan launched last year) by 30% to $1.3 billion. In the process, ABB will fine tune the structure and scope of some of its divisions as well. The company also intends to consolidate all of its brands globally, over a period of two years. Instead, it stated that it will continue to streamline and transform the unit under its own ownership. However, the company decided against letting the Power grids business go. The company has decided to sell its global high-voltage cable system business to NKT Cables in a deal worth about $934 million.The deal is part of ABB’s active portfolio management and will make the core power grids business simpler, stronger, and more focused. Last month, ABB took the first major step in the strategic evaluation of its massive Power Grids division. Spiesshofer has raised nearly $2 billion in proceeds from such activities. The Swiss engineering giant believes that it can capitalize on budding industry trends like smart grids and linking renewable energy production to consumers.Ĭhief Executive – Ulrich Spiesshofer – has been divesting underperforming businesses regularly since he took the helm over three years ago. The company insists that revamping the division instead would unlock more value for shareholders, compared to floating, spin-off or sale of the business. ABB has decided to hold on to its Power Grids business. Our shareholders will directly benefit through the return of the proceeds of the divestment.”ĪBB’s power grids business operates four segments: Grid automation, grid integration, high voltage products, and transformers.Rebuffing the demands from an activist investor, ABB Ltd. Ulrich Spiesshofer, CEO of ABB, said, “ABB’s power grids business will strengthen Hitachi as global leader in energy infrastructure and Hitachi will strengthen the position of ABB’s power grids business as a global leader. This creates further innovation for business fields such as life and industry and helps us address society’s issues and improve quality of life” Hitachi will combine ABB’s strengths in the power grids business with our digital technology to build an energy platform that contributes to innovating the energy business. Toshiaki Higashihara, President and CEO of Hitachi said, “Today’s agreement between ABB and Hitachi is a significant turning point in the global power and energy markets at a time when digital technology is fundamentally changing our society and the pattern of energy demand and supply is diversifying. US$6.4 billion after deducting debt like item from the enterprise value,” a statement issued by Hitachi said. The purchase price of 80.1 per cent stake is expected to be approx. “Hitachi and ABB agreed to the enterprise value of the company operating power grids business separated from ABB as US$11 billion. Hitachi has entered into a purchase option to acquire the remaining 19.9 per cent stake in power grids, making power grids a wholly-owned subsidiary. Hitachi plans to initially acquire an 80.1 per cent stake in the power grids business and expects to close the acquisition in the first half of 2020. today announced that it has decided to acquire the power grids business from ABB Ltd and has signed an agreement with ABB. Hitachi to Buy ABB's Power Grids Unit Valued at $11 Bn
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