Hitachi, Ltd. the Japanese multinational conglomerate company headquartered in Tokyo, today announced that it has decided to acquire the world-leading power grids business from Switzerland based ABB Ltd and has signed an agreement with ABB.
The firm plans to initially acquire an 80.1% stake in the Power Grids business and expects to close the acquisition in the first half of 2020, making Power Grids a consolidated subsidiary.
“Hitachi and ABB agreed to the enterprise value of the company operating power grids business separated from ABB as US$11 billion. The purchase price of 80.1% stake is expected to be approx. US$6.4 billion (approx. JPY704.0 billion) after deducting debt like item from the enterprise value.” Hitachi said in a statement.
However, the final price will be determined after customary adjustments for net working capital and net debt based on the actual amounts at the closing date.
Hitachi has entered into a purchase option to acquire the remaining 19.9% stake in Power Grids, making Power Grids a wholly-owned subsidiary.
“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,” said Toshiaki Higashihara, President & CEO of Hitachi, Ltd.
“ABB’s power grids business will strengthen Hitachi as global leader in energy infrastructure and Hitachi will strengthen the position of ABB’s power grids business as a global leader. Our shareholders will directly benefit through the return of the proceeds of the divestment. Building on our existing partnership announced in 2014, the initial joint venture will provide continuity for customers and our global team” said Ulrich Spiesshofer, CEO of ABB.
The transaction was assisted by UBS and Goldman Sachs Japan Co., Ltd.
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