ABB plans to sell, spin-off three business units

ABB is to spin off or sell the three business units.



ABB announced Thursday it is to offload three business divisions that generate $1.75 billion in sales, equivalent to 6% of its annual revenue. The Swiss company, which has made its mark as one of the most profitable industry leaders in power and automation technologies, said it was “exploring all options” to exit mechanical power, power conversion and turbocharging.

The announcement comes a day ahead of its first investor day under new chief Björn Rosengren.

ABB, whose core business segments include power technologies and automation technologies, has been carrying out a review of its operations since the new chief executive took the reins in March. Rosengren, who has previously led Sandvik, want to shake off units that are weighing down ABB’s revenue potential.

Earlier this year, ABB completed its divestment of 80.1 percent of its power grids business to Hitachi. It will return cash proceeds of $7.6 billion to $7.8 billion to investors.

ABB Industry Leaders Business Units

Rosengren said all three business divisions consist of “high quality” profit margins above the procured group margin corridor of 14 to 16%. The new chief may explore one of the two options, which are spin offs or complete sales.

“In this process, we will seek the best value-accretive solution for ABB and those businesses and not put ourselves under time pressure,” said Rosengren. He also added that portfolio reviews would remain in place.

As of now, no deals are set in place. ABB is open to selling the three units to business leaders in the same space, investors, or separate and float the businesses.

The Swiss engineering giant’s mechanical unit’s core offerings include bearings used in industrial food processing operations and belted drives for conveyors in giant coal mines. Its business, called Dodge, made $575 million in sales with 90% of it coming from the Americas.

One unit that is soon to be eliminated is turbocharging which had sales of $800 million. More than half of its business came from Europe. It is currently one of the biggest suppliers to the marine industry where its products boost performance of big diesel engines, including those in ships.

ABB’s power conversion unit is a major supplier to telecoms sectors. It boasts of big name clients such as AT&T and Verizon. It has sales of $375 million in 2019, three quarters of which came from North America. 

Avatar
Christy Gren
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.

Recent Posts

Mercedes unveils EQS electric sedan to rival Tesla’s models

Mercedes unveils EQS electric sedan to rival Tesla’s models

Mercedes-Benz has unveiled a battery-powered luxury car as part of the brand’s flagship S-Class saloon, designed to compete with Tesla. The 2022 Mercedes-Benz EQS is set to relea
9 hours ago
Major US banks report surge in profits for the quarter

Major US banks report surge in profits for the quarter

Three major US banks —JPMorgan Chase & Co., Wells Fargo & Co. and Goldman Sachs Group Inc.—reported earnings results for the first quarter of 2021.
9 hours ago
Bitcoin Price surges above $63,000 ahead of Coinbase IPO

Bitcoin Price surges above $63,000 ahead of Coinbase IPO

Bitcoin price has once again soared over $63,000 USD as the cryptocurrency market braces for the upcoming Coinbase IPO. The San Francisco-based cryptocurrency exchange platform, wh
11 hours ago
Global ETFs reach a new record of $359.2bn in 3 months of ’21

Global ETFs reach a new record of $359.2bn in 3 months of ’21

Global economy recovery is well on its path going by the money being put in the exchange traded funds, especially in the last quarter. A trillion dollars has entered the traded fun
1 day ago
AppLovin gaming app goes public, valued at $28.6 billion

AppLovin gaming app goes public, valued at $28.6 billion

AppLovin Corp, the Palo Alto, California-based mobile app and gaming company, has priced its initial public offering at $80, which puts the company’s valuation at $28.64 billion.
1 day ago
JPMorgan earnings beat forecasts amid strengthening US economy

JPMorgan earnings beat forecasts amid strengthening US economy

JPMorgan Chase, the largest bank in America by assets reported favorable results on Wednesday, beating analysts’ estimates on trading revenue. It is the first major bank to repor
2 days ago