ABB confirms talks with Hitachi over power grid business
ABB is in talks with Hitachi over a deal centred around its power grid business, which the Swiss engineering company is reportedly looking to sell.
Shares were up today on the announcement, which follows weeks of speculation over whether the 147,000-worker manufacturing organisation would sell its power grid arm.
Discussions with Hitachi, Mitsubishi Electric Corp and State Grid of China to sell parts of the business were reported last month, but todays clarification appears to mark a step forward in narrowing down a potential buyer.
In a statement today, ABB said it is “in discussions with Hitachi to expand and re-define the existing strategic power grid partnership between the two companies announced in December 2014”.
The power grid part of ABBs business, which makes transformers and electricity substations among other things, has historically performed poorly in relation to other segments like automation.
But since chief executive Ulrich Spiesshofer decided to keep the business two years ago against the will of some shareholders, it has performed better.
In Japan, the Nikkei newspaper reported the companies were approaching a deal which would see Hitachi pay between ¥600bn and ¥800bn (£4.21bn-£5.61bn) for a 50 per cent stake in the business.
ABB is reportedly looking to focus its efforts on more profitable arms of its business, such as those manufacturing for the automation and robotics sectors.
The company added: “There can be no certainty that any transaction will occur, or as to the timing, structure or terms of any transaction.”
Shares were up 3 per cent today.