ABB sells 80% of Power Grids division to Hitachi for $6.4bn

ABB

 Dec 18, 2018

Hitachi has finalized a deal with industrial giant ABB to purchase 80% of their Power Grids division for $6.4bn. The move marks a transition for Hitachi, which will look to expand its energy solutions offerings by combining ABB’s power grids business with their digital technology division.

ABB will retain 19.9% in the deal, which values the business at $11bn.

With the deal ABB will look to restructure to boost their overall performance after losing 25% in share prices over the past year. While for Hitachi, the move will increase their ability to compete with global industry leaders like General Electric and Siemens.

Hitachi acquires 100 manufacturing sites, 200 sales sites and 36,000 employees.

Cevian Capital, a 5% stakeholder in the power grids business, attempted to purchase Power Grids in 2016, at which time ABB sought to turn around the business internally.

ABB said the divestment to Hitachi expands on an existing partnership and will turn Power Grids into a global infrastructure leader “with enhanced access to markets and financing.”

“Hitachi will combine ABB’s strength in the power grids business with our digital technology to build an energy platform that contributes to innovation the energy business,” said Hitachi President and CEO Toshiaki Higashihara, adding, “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 175

ABB will also return 100% of the net profits, estimated a $7.6-7.8bn to its share holders through share buybacks, or a similar method. The deal is expected to close by the first half of 2020.

ABB reduces annual run-rate costs by $500m as a result of the deal.

“ABB has been driving industrial change for more than a century as a global pioneering technology leader. As a result of our Next Level strategy, all of our businesses are today number 1 or 2 in their respective markets. To support our customers in a world of unprecedented technological change and digitalization, we must focus, simplify and shape our business for leadership. Today’s actions will create a new ABB, a leader focused in digital industries,” said ABB CEO, Ulrich Spiesshofer.

ABB will simplify its organizational structure to facilitate its four leading businesses, focusing responsibilities and increasing efficiencies.ABB 175

The four business are: Electrification, Industrial Automation, Robotics & Discrete Automation and Motion. Each business will be top global leaders in their respective market. ABB’s established domain know-how, world-class engineering and technology expertise, will position the four businesses well to deliver innovative products and solutions for enhanced customer value. ABB’s addressable market is growing by 3.5-4 percent per annum, adding $140 billion in size to reach $550 billion by 2025.

“Today’s announcement marks the beginning of a new chapter in ABB’s history. Building on our technology and global talented employee base we will further strengthen our focus in digital industries,” said ABB Chairman, Peter Voser.

Source:

https://new.abb.com/news/detail/12473/abb-shaping-a-leader-focused-in-digital-industries

https://www.hitachi.com/New/cnews/month/2018/12/f_181217.pdf

Related Articles


Latest Articles

  • The Non-Residential Sector Declines in All Three Components Despite Sustained Industrial Permit Level

    The Non-Residential Sector Declines in All Three Components Despite Sustained Industrial Permit Level

    November 4, 2024 The total value of building permits in Canada decreased by $858.1 million (-7.0%) to $11.5 billion in August, following a strong July during which construction intentions rose sharply (+20.8%). The residential and non-residential sectors contributed to the decrease in August. On a constant dollar basis (2017=100), the total value of building permits decreased 7.6% in… Read More…

  • A Slight Decrease in Residential Building Construction for August

    A Slight Decrease in Residential Building Construction for August

    November 4, 2024 Investment in building construction edged up 0.2% to $21.0 billion in August, after a 1.6% decrease in July. The residential sector edged down (-0.1%) to $14.6 billion, while the non-residential sector was up 1.0% to $6.4 billion. Year over year, investment in building construction grew 7.2% in August. On a constant dollar basis (2017=100), investment in building construction was… Read More…

  • When a Familiar Door Closes

    When a Familiar Door Closes

    November 4, 2024 By Keith Sones, seasoned utility industry executive Most of the articles I’ve written have been based on personal experiences, many of them occurring decades ago, which eventually translate into helpful life lessons. The years allow the events to marinate in a savoury stew of time and reflection, clarity never coming immediately, or even… Read More…

  • Regulatory Changes to Manitoba Apprenticeship and Certification System

    Regulatory Changes to Manitoba Apprenticeship and Certification System

    November 4, 2024 Effective October 30, 2024, Manitoba’s apprenticeship and certification system will undergo regulatory changes. These changes aim to enhance responsiveness to industry needs, align with Red Seal standards, and improve the quality of apprentice training and safety. Go HERE for more information Source Read More…


Changing Scene