ABB to buy back up to 10 per cent of shares after Power Grids sale

ABB received an estimated $7.6-$7.8 billion from the sale of an 80.1 per cent stake in Power Grids, which it completed as planned by the end of June

ZURICH: ABB plans to buy back up to 10 per cent of its stock, currently worth more than $4 billion, after completing the sale of its Power Grids business to Hitachi .

The Swiss engineering group said on Wednesday it planned to start the buyback after its second quarter results on July 22 and that it would ask shareholders at next year’s annual meeting to approve cancelling the repurchased shares.

ABB received an estimated $7.6-$7.8 billion from the sale of an 80.1 per cent stake in Power Grids, which it completed as planned by the end of June.

The company plans to buy back around 180 million shares, which at Wednesday’s share price would cost 3.93 billion Swiss francs ($4.15 billion).

Decisions on what to do with the remaining money will come at the company’s next AGM, in March 2021.

“We are planning a multi-stage approach for how we deal with the cash from the sale of the Power Grids business to Hitachi,” an ABB spokesman said.

“There will be a clear focus on returning cash to shareholders and optimising our capital structure,” he added.

The company’s shares, which have lost nearly 9 per cent this year, were up more than 2 per cent after the announcement.

New Chief Executive Bjorn Rosengren said the sale meant ABB was now able to focus more on industrial customers and implementing a decentralised business model.

ABB, which makes products ranging from factory robots to electric vehicle chargers, will keep a 19.9 per cent holding in Power Grids, a business with revenues of $10 billion and 36,000 employees.

The Swiss company has a predefined option to exit its stake in three years time.

Source: reuters