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Hitachi to announce purchase of ABB's power grid business on Monday: Report

A source familiar with the situation has valued the power grid business at between $10 billion and $12 billion

Makiko Yamazaki | Reuters  |  Tokyo 

Deal structuring eased, teething troubles remain
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Ltd and ABB will announce on Monday a plan for the Japanese conglomerate to buy the Swiss engineering group's power grid business, paying up to $7 billion for an initial 50 per cent stake, the Nikkei business daily reported.

The two companies, which have previously said they were in talks over the deal, will hold a news conference later on Monday, the business daily said.

The acquisition would allow to boost its global presence in the power grid industry, while ABB, which also makes industrial robots, wants to offload its least profitable division to focus on areas such as automation.

A spokesman declined to confirm the report, saying it was not something the company had announced.

A source familiar with the situation has valued the power grid business at between $10 billion and $12 billion.

Other sources have said that ABB could keep a stake in the power grid business via a joint venture with Hitachi.

The Nikkei reported that the deal would see Hitachi pay 600 billion-800 billion yen ($5.3 billion to $7 billion) for an initial 50 per cent stake in the business.

ALSO READ: ABB nears sale of power grids units to Hitachi in $11 billion deal

ABB's power grid business employs 36,000 people and had sales of $10.4 billion last year. It had an operating profit margin of 10.0 per cent in the third quarter, down 60 basis points from a year earlier.

The decision to sell it marks a U-turn for ABB Chief Executive Ulrich Spiesshofer, who decided to keep the business two years ago despite calls from some shareholders to sell.

First Published: Mon, December 17 2018. 08:58 IST
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