Shareholders cash in as Hitachi snaps up ABB division for nearly £8bn

ABB shareholders will pocket the cash as it sells off its least profitable business arm for between $7.6bn and $7.8bn (£6bn-£6.2bn) to Japanese conglomerate Hitachi.

The deal values the power grids unit at $11bn and leaves ABB with a nearly 20 per cent stake, with the option to sell in three years.

It comes after pressure from activist investor Cevian and other shareholders to sell the division which employs around 36,000 people and has approximately $10.4bn in sales.

“With this transaction, we are realising the value we have built through the transformation of power grids over the last four years. Our shareholders will directly benefit through the return of the proceeds of the divestment,” ABB chief executive Ulrich Spiesshofer said.

Zurich-based ABB also said it would change the structure of its remaining businesses, reducing annual run rate costs by around $500m across the group.

Hitachi chief executive Toshiaki Higashihara said: “Today’s agreement between ABB and Hitachi is a significant turning point in the global power and energy markets at a time when digital technology is fundamentally changing our society and the pattern of energy demand and supply is diversifying.

“Hitachi will combine ABB’s strengths in the power grids business with our digital technology to build an energy platform that contributes to innovating the energy business. This creates further innovation for business fields such as life and industry and helps us address society’s issues and improve quality of life.”