ABB to Divest Cable Business to NKT Cables
NKT Cables is acquiring ABB’s global high-voltage cable system business with a total enterprise value of 836 million euros (US$934 million). High voltage cables are key components in sustainable energy networks, used for transmitting large amounts of electricity over long distances. The business is part of ABB’s Power Grids division, which is currently undergoing a strategic review.
NKT Cables designs, manufactures and supplies power cables for low-, medium- and high-voltage solutions mainly in the Alternating Current (AC)-area. It has major production facilities in Europe and China as well as sales offices around the world, and employs around 3,200 people. In 2015, revenue was 1.2 billion euros.
“We are combining two strong cable portfolios rooted in a shared Nordic heritage that will be more competitive on a larger scale under NKT Cables’ ownership, while maintaining access to supply through a long-term strategic partnership,” said ABB CEO Ulrich Spiesshofer. “The combination of our niche cable system business with the strength of NKT Cables demonstrates our commitment to active portfolio management, a key element of our Next Level strategy.”
ABB’s high-voltage cable technology and manufacturing as well as service footprint is highly complementary with NKT Cables’ activities, making the combined business ideally suited to serve the rising global demand for long-distance power transmission cable systems. The combined operational scale and reach of the two businesses is expected to lead to even better service for global customers.
“ABB’s high-voltage cable business will add considerable strength to our portfolio and bring us a world-class manufacturing operation. We will leverage the technology, domain competence and highly skilled workforce to grow this business,” said Michael Hedegaard Lyng, President and CEO of NKT Cables. “We look forward to ramping up our long-term partnership that will serve future projects all around the world.”
ABB’s cable system business offers turnkey solutions including design, engineering, supply, installation, commissioning and service. It had adjusted standalone revenues of US$524 million in 2015, employs around 900 people, and has state-of-the art manufacturing and R&D capabilities for high-voltage submarine and underground cables in Karlskrona, Sweden. The transfer of assets also includes a new, cutting-edge cable-laying vessel, currently under construction. With experience of over a century, the business serves a range of applications and has commissioned hundreds of alternating current and direct current links around the world.
“As part of the strategic partnership, ABB and NKT Cables will work together on future projects to access market opportunities in areas like sub-sea interconnections and Direct Current (DC) transmission links”, said Claudio Facchin, president of ABB’s Power Grids division. “This transaction will simplify and focus the Power Grids portfolio.”
The transaction is anticipated to close in Q1 2017, subject to regulatory clearances and fulfilment of the closing conditions. Goldman Sachs acted as exclusive financial advisor to ABB and Freshfields Bruckhaus Deringer as legal advisor.
ABB will report on the progress of its Next Level strategy, including the strategic portfolio review of its Power Grids division, at its upcoming Capital Markets Day on October 4, 2016.
ABB (www.abb.com) is a leading global technology company in power and automation that enables utility, industry, and transport and infrastructure customers to improve their performance while lowering environmental impact. The ABB Group of companies operates in more than 100 countries and employs about 135,000 people.
Important notice about forward-looking information
This press release includes forward-looking information and statements. These statements are based on current expectations, estimates and projections and are generally identifiable by statements containing words such as “expects,” “believes,” “estimates,” “targets,” “plans,”, “anticipates”, “is likely” or similar expressions. However, there are many risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking information and statements made in this press release including such factors as may be discussed from time to time in ABB Ltd’s filings with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 20-F. Although ABB Ltd believes that its expectations reflected in any such forward-looking statement are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved.
Antonio Ligi, Domenico Truncellito, Sandra Wiesner
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