Spiesshofer has quit some businesses to improve the power grids division’s performance, selling high-voltage cables and exiting the engineering, procurement and construction business last year. The CEO, who took charge in September 2013, has supervised a more than three-year reorganization that has yet to pay off, with the company hit by a collapse in demand from the oil and gas market. ABB stock has lost 15 percent this year to trade at about 22 francs. “So far we have seen no evidence of an underlying improvement in power grids, nor in the company as a whole,” he told Reuters.Īrtisan, which describes itself as a long-term value-oriented investor, said that ABB should follow rivals Siemens and Honeywell International in streamlining.Ĭhief Executive Ulrich Spiesshofer said in October 2016 that ABB could reach a 35 franc share price while remaining intact. “ABB is too big, it is too complicated and the company would gain significantly by achieving more focus,” said David Samra, portfolio manager at Artisan Partners, ABB’s fifth-largest shareholder with a 1.6 percent stake. The power and automation company reports first-quarter figures on Thursday, with investors braced for another tepid performance from power grids - its largest but least profitable division, which it decided to keep in 2016.Ĭoncerned by weak share performance since then, investors say ABB should simplify operations ranging from industrial plugs and fittings to electric motors for ships and factories. “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,” he added.ZURICH (Reuters) - ABB faces renewed shareholder demands to break up its sprawling business empire and to start by ditching its struggling power grids division. Meanwhile Ulrich Spiesshofer, chief executive at ABB, said the combination of the power grids business with Hitachi stood to make for a “globally leading infrastructure business”. This creates further innovation for business fields such as life and industry and helps us address society’s issues and improve quality of life,” he said. “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 chief executive at Hitachi, described the deal as a “significant turning point” for global energy and power markets at a time when digital technology is “fundamentally changing” energy demand and supply. Hitachi pointed to internal analysis that placed the global power grids market as having the potential to be valued at US$100 billion by 2020, with growth predominantly driven by the transition towards renewable energy and significant electrification. Hitachi said the transaction would allow it to combine ABB’s grid-level technology with Hitachi’s digital platform and look to expand Hitachi’s reach through ABB’s customer base.įurthermore, Hitachi is aiming to expand its reach into adjoining markets such as emobility and C&I energy. The final purchase price will be based on customer adjustments for net working capital and net debt based on the closing date, which has been tentatively slated for H1 2020. Hitachi will pay a purchase price of US$6.4 billion (£5 billion) for the initial 80.1% after deducting debt-like items from the unit’s value. Hitachi and ABB have agreed to a deal which values the power grids business at around US$11 billion (£8.7 billion). Hitachi is to acquire an 80.1% stake in the power grids division and has also entered into a purchase option for the remaining 19.9% share, turning power grids into a wholly-owned subsidiary of Hitachi. Power electronics giant Hitachi has acquired ABB’s power grids business in an US$11 billion (£8.7 billion) deal which cements its position in the energy solutions sector.
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