ABB to Keep Power Grid Unit Despite Calls for Spinoff -- 2nd Update
October 04 2016 - 2:53AM
Dow Jones News
By Brian Blackstone
ZURICH--Swiss engineering giant ABB Ltd. on Tuesday rebuffed
calls from some of its largest shareholders to spin off its power
grid unit, saying it would revamp the division instead under its
ownership.
"Following a comprehensive strategic portfolio review, the board
and executive committee of ABB have concluded that the
transformation of Power Grids under ABB ownership will unlock
maximum shareholder value compared to other ownership options such
as sale, [initial public offering], spinoff or joint venture," the
company said, as it unveiled a broad strategic review of its
operations.
ABB also said it plans to buy back up to $3 billion of its
shares from 2017 through 2019.
The share buyback "reflects the company's confidence and the
continued strength of ABB's cash generation and financial
position," the company said, and reaffirmed its aim to generate 3%
to 6% annual revenue growth from 2015 to 2020
The Wall Street Journal reported last month that two top
shareholders in ABB--Swedish activist fund Cevian Capital and
U.S.-based Artisan Partners--were urging the company to spin off
its power grids unit to streamline operations and raise shareholder
value.
"In our strategic portfolio review we have listened carefully to
all stakeholders and all expressed views," ABB Chief Executive
Ulrich Spiesshofer said Tuesday.
"After a very thorough and detailed process, supported by
leading advisers, we have concluded that the continued
transformation of power grids under ABB's ownership creates the
highest value for our shareholders and customers," he said.
In a conference call with reporters, Mr. Spiesshofer said he
spoke with large investors including Cevian earlier Tuesday, though
he declined to disclose details of those calls.
"We will drive a lot of value creation for our shareholders"
with the measures unveiled Tuesday, he said.
ABB also announced Tuesday a strategic partnership with
Microsoft Corp. to combine cloud technology with industrial digital
technology.
It unveiled a separate partnership with Fluor Corp. for
engineering and construction projects related to electrical
substations.
Write to Brian Blackstone at brian.blackstone@wsj.com
(END) Dow Jones Newswires
October 04, 2016 02:38 ET (06:38 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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