Japanese conglomerate Hitachi has agreed to buy 80.1% stake in Swiss engineering group ABB’s power grid business at an enterprise valuation of $11 billion.
As per the terms of the deal, ABB would initially retain 19.9% stake in the power grid division to ensure smooth transition and would have a pre-defined exit option for this stake at fair market value with floor price at 90% of agreed enterprise value exercisable by ABB three years after closure of the transaction.
The joint venture would be headquartered in Switzerland with Hitachi retaining the management team to ensure business continuity.
To return cash
The divestment expands the existing partnership and strengthens power grid as a global infrastructure leader with enhanced access to markets and financing, said ABB in a statement adding that ABB intends to return 100% of the estimated net cash proceeds of $7.6-7.8 billion from the 80.1% sale to shareholders in an expeditious and efficient manner through share buyback or similar mechanism.
“To support our customers in a world of unprecedented technological change and digitalisation, we must focus, simplify and shape our business for leadership. Today’s actions will create a new ABB, a leader focused in digital industries,” said Ulrich Spiesshofer, CEO, ABB.
