Swiss technology company ABB has completed the sale of 80.1% of its Power Grids business. Japanese company Hitachi has paid $6.85bn for ABB’s former stake.
The deal was first announced in December 2018, when Hitachi signed an agreement to acquire ABB’s Power Grids business.
ABB Board of Directors chairman Peter Voser said: “Today’s announcement marks an important turning point in the history of ABB. Since announcing our intention to divest Power Grids to Hitachi, ABB has made significant progress in becoming a more customer-focused and simplified organisation.
“We believe Hitachi is the best owner for Power Grids and its next stage of development, building on the solid foundation achieved under ABB’s previous ownership.
“ABB remains committed to using net cash proceeds from the transaction for a share buyback program. Our goal is to execute this in an efficient and responsible way, taking account of the prevailing circumstances.”
Hitachi ABB Power Grids joint venture
The company has said it will return $7.6bn-$7.8bn to shareholders as part of its capital structure optimisation programme. It will retain its 19.9% equity stake in the wind farm, forming a “long-term” joint venture with Hitachi.
Operating as Hitachi ABB Power Grids, the venture will be headquartered in Switzerland.
With the completion of the divestment, ABB intends to focus on key market trends. It says these include the electrification of transport and industry, automated manufacturing, digital solutions, and increased sustainable productivity.
ABB CEO Björn Rosengren said: “With the divestment, ABB is well-positioned for the future with a strong focus on industrial customers.
“Leveraging our technology leadership and passion for innovation, we will now focus on creating superior value for our customers, employees and shareholders.”
The transaction terms with Hitachi remain as previously announced, with an enterprise value of $11bn for 100% of the business. ABB can exit the retained 19.9% shareholding three years after closing.