Hitachi's full takeover of ABB power grid to keep pace with Siemens Germany
Date: December 18, 2018
The news that ABB intends to sell its power equipment business has finally come to an end since October. Hitachi has agreed with ABB to buy 80.1% of its grid subsidiary for $6.2 billion, the largest acquisition since its inception in 1910.
The deal will take the form of a joint venture, according to the announcement. ABB will retain its remaining 19.9 per cent stake initially, with an option to sell three years after the deal closes, with Hitachi having a call option on the stake. Hitachi plans to spend billions more over the next five years or so to fully take over ABB's grid business.
For Hitachi, acquisition is one of the most important actions of restructuring, hoping to help the company become the world's leading grid company. Analysts point out that Hitachi will be the world's top power supplier in the field of power distribution, and will keep pace with Siemens Germany in the overall scale of the enterprise.
The sale of the grid business is a "u-turn" planned by ABB CEO Spifford, who decided to retain the business two years ago. Although the sector has performed well over the past two years, the weak performance of the grid has weighed on ABB's share price. ABB can return sales earnings to shareholders through a new stock repurchase plan and accelerate automated acquisitions.
ABB Group expects to complete the restructuring in the first half of 2020, subject to regulatory approval and meeting the completion conditions. After that, ABB will focus on digital business, use ABB Ability digital solutions to promote business departments to enhance customer value, and through a common platform to play a synergistic role, take action to strengthen ABB's leadership in digital solutions and emerging technology areas such as artificial intelligence.
ABB said the joint venture would be headquartered in Switzerland and Hitachi would retain its management team to ensure business continuity.
(This article is reprinted from Sohu.com.)