Manufacturers

News Reports: ABB May Sell Power Grid Business

Two news organizations are reporting ABB Ltd. may sell its power-grids business and consider other acquisitions in excess of $4 billion as part of a plan to re-organize its operations.

The world’s largest power-grids supplier is looking for targeted purchases as it reassesses a product lineup spanning electric vehicle charging stations, factory robots and high-voltage generators, according to an interview Chief Executive Officer Ulrich Spiesshofer gave late last week.

“We are ready to reengage in meaningful M&A,” Spiesshofer, 51, said on Friday, September 18 in an interview with Reuters and Bloomberg in New York. “We have added to the portfolio, but we have also parted ways with the portfolio. This is the way it will continue. We are really shaping ABB in a leaner, more agile way.”

According to the news reports, ABB’s strategy includes potentially divesting the grids division, and speculation is it comes from shareholder pressure to boost profitability. Since becoming CEO in 2013, Spiesshofer has focused on reducing costs, improving margins and increasing global sales hampered by economic headwinds and a decline in the oil and gas market. This is the first year Spiesshofer was able to return the power systems unit to the black.

Spiesshofer said in the interview that there are still a number of possible strategic decisions, including keeping the power grid operations.  “We’re looking at the technology, we’re looking at the business model, we’re looking at the end markets, we’re looking at the value chain and we’re looking at the ownership structure,” he told the news organizations in the interview. He added that as far as the power grid operation goes, “could be that we keep it, it could be that we put it in a joint venture, it could be it parts ways with ABB.”

The company has made about two dozen acquisitions in the past five years, including its two largest: the $4.2 billion Baldor Electric Co. and $3.9 billion Thomas & Betts Corp. deals. After putting a hold on larger purchases last year, Spiesshofer said he would now be comfortable with a deal as large as Baldor and may consider bigger targets. The company could expand in markets including home automation or low- and medium-voltage electrification products, he said. “We have a clear transformation agenda for this company,” Spiesshofer said. “The team is ready, the balance sheet is ready.”

 

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