ABB completed the sale of its power grid business to Hitachi

Hitachi ABB Power Grids joint venture commenced operations

ABB's product portfolio is focused on industrial customers

Net cash proceeds will be returned to shareholders as planned

Today, ABB achieved a major milestone in the company's transformation into a decentralized global technology company, completing the divestiture of 80.1% of its power grid business to Hitachi as planned.

The divestment allows ABB to focus on key market trends and customer needs, such as transportation and industrial electrification, automated manufacturing, digital solutions and improving sustainable productivity.

"Today's announcement marks an important turning point in ABB's history. Since announcing the intention to spin off Power Grids to Hitachi, ABB has made significant progress toward becoming a more customer-centric and streamlined organization. We believe Hitachi is the best owner of the grid and its next phase of development, building on the solid foundation gained from ABB's previous ownership," said Peter Voser, Chairman of ABB's Board of Directors. "ABB remains committed to using the net cash proceeds from the transaction for the share repurchase program. Our goal is to carry out this work in an effective and responsible manner, taking into account the current situation. ”

In line with ABB's capital structure optimization plan, ABB plans to return $7.6 billion to $7.8 billion in net cash proceeds to shareholders through the sale of the grid. ABB initially intended to launch a 10% share repurchase program1 shortly after the release of its financial results for the second quarter of 2020, and the company had issued share capital. This equates to approximately 180 million shares, excluding treasury shares.

The share buyback program will be executed on the second trading line of six Switzerland exchanges and is scheduled to last until the company's annual general meeting (AGM) on March 25, 2021. At the Annual General Meeting, ABB intends to seek shareholder approval for the cancellation of shares purchased through the program and to announce more details of its ongoing capital structure optimization program. ABB aims to maintain its "Single A" credit rating.

"With the divestment, ABB is well positioned for the future, with a focus on industrial customers. With our technology leadership and passion for innovation, we will now focus on creating exceptional value for our customers, employees and shareholders. We will achieve this by developing our diversified business model, strengthening our performance management culture and driving active portfolio management," said Björn Rosengren, CEO of ABB.

ABB is a long-term partner of Hitachi and will initially retain a 19.9% stake in the joint venture, which will operate as Hitachi ABB Power Grids and will be headquartered in Switzerland. The joint venture is a global leader in power systems, with annual revenues of approximately $10 billion, approximately 36,000 employees, and serves customers in more than 90 countries. The joint venture's board of directors includes Timo Ihamuotila, ABB's chief financial officer, and Frank Duggan, a former member of ABB's executive committee. Hitachi ABB Power Grids will be led by Claudio Facchin as CEO.

The terms of the deal with Hitachi are the same as those announced on December 17, 2018, and the 100% business has an enterprise value of $11 billion. ABB has a pre-defined option to exit the retained 19.9% equity three years after the closing of the transaction.

ABB completed the sale of its power grid business to Hitachi

ABB completed the sale of its power grid business to Hitachi

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