ABB is divesting its Power Grids business to Japan’s Hitachi, which will expand existing partnership between the two companies and provide Power Grids with enhanced access to markets and financing, the company said in a press release.
The two companies have reached a deal in which Hitachi will buy 80.1% stake in the Power Grids business at the agreed price of $11 billion for 100 % of Power Grids.
“Power Grids will strengthen Hitachi as global leader in energy infrastructure and Hitachi will strengthen Power Grids’ position as a global leader in power grids. With this transaction, we are realizing the value we have built through the transformation of Power Grids over the last four years. Our shareholders will directly benefit through the return of the proceeds of the divestment. Building on our existing partnership announced in 2014, the initial joint venture will provide continuity for customers and our global team,” said ABB CEO, Urlich Spiesshofer.
ABB said it will initially retain a 19.9 % stake in the divested unit. The company intends to return net cash proceeds of an estimated $7.6-7.8 billion from selling the stake in the unit to shareholders through a share buyback and other measures.
The joint venture will be headquartered in Switzerland, with Hitachi retaining the management team to ensure business continuity.