In accordance with the agreement signed on December 17, 2018, Hitachi Ltd. and ABB Ltd announced the completion of all required procedures as planned, and the formation of Hitachi ABB Power Grids Ltd. Hitachi has an 80.1 percent stake in this new joint venture entity (which has business volume of approximately 10 billion USD2) and ABB holds the balance.
Toshikazu Nishino, Executive Vice President of Hitachi, is the Chairman of the new entity and Claudio Facchin the CEO. The new entity is headquartered in Zurich, Switzerland, and the current management team will ensure business continuity.
The joint venture brings together two respected companies to create a new global power leader. The alliance with Hitachi will facilitate expansion opportunities for the new entity in areas such as mobility, smart cities, industry, energy storage and data centers, besides providing financial muscle to support ambitious projects and enabling access to Japan, the third largest economy in the world.
ABB’s Net cash Proceeds to Be Returned to Shareholders as Planned
The divestment allows ABB to focus on key market trends and customer needs, such as the electrification of transport and industry, automated manufacturing, digital solutions and increased sustainable productivity.
Consistent with ABB’s capital structure optimization program, ABB plans to return to shareholders net cash proceeds of $7.6–7.8 billion from the sale of Power Grids. ABB initially intends to launch a share buyback program of 10 percent of the company’s issued share capital shortly after the release of its second quarter 2020 financial results. This represents about 180 million shares, when excluding treasury shares.
The share buyback program will be executed on a second trading line on the SIX Swiss Exchange and is planned to run until the company’s Annual General Meeting (AGM) on March 25, 2021. At the AGM, ABB intends to request shareholder approval to cancel the shares purchased through this program and to announce further details on its ongoing capital structure optimization program. ABB aims to maintain its “single A” credit rating.
The transaction terms with Hitachi remain as announced on December 17, 2018, with an enterprise value of $11 billion for 100 percent of the business. ABB has a pre-defined option to exit the retained 19.9 percent shareholding three years after closing.