Sell power Grid business to Hitachi Group, expand existing partnerships, strengthen global power grid business leadership, expand markets and access to financing
Transfer of the entire Grid business at an enterprise valuation of $11 billion, equivalent to 11.2 times enterprise valuation/operating EBITDA
Take significant steps to focus and lead the digital industry, streamline business models and organizational structures, and improve customer value and shareholder returns
- Divested the power grid business and focused on the development of the digital industry
Sell power Grid business to Hitachi Group, expand existing partnerships, strengthen global power grid business leadership, expand markets and access to financing
Transfer of the entire Grid business at an enterprise valuation of $11 billion, equivalent to 11.2 times enterprise valuation/operating EBITDA
Identify the value of the grid business transformation, including a doubling of the operating margin before interest, tax and amortization compared to 2014
ABB will initially retain a 19.9% stake in the divested power grid business to ensure a seamless transition. ABB can sell the stake three years after the deal closes, at a floor price of 90 per cent of the agreed corporate valuation
The transaction is expected to close in the first half of 2020
ABB will return all net cash proceeds from the sale of 80.1% of the shares, amounting to US $7.6 to US $7.8 billion, to shareholders in a fast and efficient manner through a share repurchase or similar mechanism
- Streamline the business model and organizational structure
No longer use the traditional matrix structure
The Business unit will operate all customer-facing activities, as well as business functions and regional management, strengthening entrepreneurship
Strengthen business units by adapting experienced national management resources
The existing national and regional structures, including the Regional Executive Committee, will be terminated upon closing
The Group's efforts will focus on group strategy, portfolio and performance management, capital allocation, core technologies and the ABB Ability™ platform
- Based on the customer model, build the world's leading four business units
Create four business units ranked first or second in the world:
- The Electrical Business Unit is headed by Mehta
- The Industrial Automation Business Unit is headed by Tang Weishi
- Robotics and Discrete Automation, a combination of B&R and Robotics, led by Sam
The Motion Control business unit, which combines ABB's market-leading electric Motors and drives business, will be led by Marten, who will join the Group Executive Committee on April 1, 2019
ABB Ability™ digital solutions will enable each business unit to enhance customer value and create synergies through a common platform
Actions to strengthen ABB's leadership in digital solutions and emerging technologies such as artificial intelligence
- Financial implications for the new ABB
Group-wide annual cost reductions of $500 million
Approximately $500 million in non-operating restructuring charges
- New financial framework after completion of the transaction
New group objectives framework
Capital investment priorities remain unchanged
Dividend policy: Continuously improve earnings per share
ABB plans to maintain its dividend per share after the transaction
ABB plans to maintain its' A 'credit rating for the long term
Other business and financial targets will be further disclosed with the publication of the Group's strategic plan
- The Group will announce new strategic, business and financial targets in more detail on 28 February 2019, in conjunction with the fourth quarter and full year 2018 financial reports
"As a global technology leader, ABB has driven the development of a wide range of industries for more than a century," said ABB Group Chief Executive Officer Peter Spiff. Thanks to the implementation of the 'Next phase' strategy, all of our businesses are ranked first or second in their respective segments of the global market. To better support our customers as they embrace the unprecedented technological revolution and digital wave, we must comprehensively focus, streamline and reshape our business to further strengthen ABB's leadership position. The initiatives announced today will shape a new ABB that will lead the digital industry."
