ABB Ltd yesterday announced that it completed the divestment of its 80.1% stake in the Power Grids business. The other party to the transaction was Tokyo, Japan-based Hitachi, Ltd. (HTHIY - Free Report) .
The stake sale was originally announced by ABB in December 2018. It is worth noting here that the company’s share price increased 3.1% yesterday, closing the trading session at $23.26.
Notably, ABB’s Power Grids business engages in providing systems, software, products and service solutions. The offerings are mainly used by the company’s infrastructure, industry, utility and transport customers. The business is spread across Africa, the Americas, Asia, Europe and the Middle East.
Inside the Headlines
As noted, ABB Power Grids under Hitachi will operate as a joint venture named Hitachi ABB Power Grids. With its headquarters in Switzerland, the joint venture will have 36,000 employees, business in at least 90 countries and revenues (annualized) of $10 billion.
Initially, ABB will hold a 19.9% stake in Hitachi ABB Power Grids. However, it will have the option to dispose of its stake in the coming three years at fair market value — with the floor price set at 90% of the enterprise value. Notably, the enterprise value of 100% of ABB Power Grids is pegged at $11 billion.
The company intends on using the net proceeds from the divestment for rewarding shareholders with $7.6-$7.8 billion. To begin with, it anticipates repurchasing its shares through a buyback program for 10% (or 180 million) of its outstanding shares.
The divestment is likely to be a win-win situation for ABB and Hitachi. While ABB can focus more on its core businesses, the expansion in the power grid industry will become easy for Hitachi.
Zacks Rank, Price Performance and Estimates
ABB currently has a market capitalization of $48.9 billion and a Zacks Rank #4 (Sell). The company is wary about the volatile oil market and the adverse impact of the pandemic on its operations.
In the past three months, the company’s share price has increased 41.2% compared with the industry’s growth of 35.3%.
Currently, the Zacks Consensus Estimate for ABB’s earnings is pegged at 70 cents per share for 2020 and $1.03 for 2021, suggesting growth of 9.4% and 6.2% from the respective 60-day-ago figures.
ABB Ltd Price and Consensus
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ABB Ltd yesterday announced that it completed the divestment of its 80.1% stake in the Power Grids business. The other party to the transaction was Tokyo, Japan-based Hitachi, Ltd. (HTHIY - Free Report) .
The stake sale was originally announced by ABB in December 2018. It is worth noting here that the company’s share price increased 3.1% yesterday, closing the trading session at $23.26.
Notably, ABB’s Power Grids business engages in providing systems, software, products and service solutions. The offerings are mainly used by the company’s infrastructure, industry, utility and transport customers. The business is spread across Africa, the Americas, Asia, Europe and the Middle East.
Inside the Headlines
As noted, ABB Power Grids under Hitachi will operate as a joint venture named Hitachi ABB Power Grids. With its headquarters in Switzerland, the joint venture will have 36,000 employees, business in at least 90 countries and revenues (annualized) of $10 billion.
Initially, ABB will hold a 19.9% stake in Hitachi ABB Power Grids. However, it will have the option to dispose of its stake in the coming three years at fair market value — with the floor price set at 90% of the enterprise value. Notably, the enterprise value of 100% of ABB Power Grids is pegged at $11 billion.
The company intends on using the net proceeds from the divestment for rewarding shareholders with $7.6-$7.8 billion. To begin with, it anticipates repurchasing its shares through a buyback program for 10% (or 180 million) of its outstanding shares.
The divestment is likely to be a win-win situation for ABB and Hitachi. While ABB can focus more on its core businesses, the expansion in the power grid industry will become easy for Hitachi.
Zacks Rank, Price Performance and Estimates
ABB currently has a market capitalization of $48.9 billion and a Zacks Rank #4 (Sell). The company is wary about the volatile oil market and the adverse impact of the pandemic on its operations.
In the past three months, the company’s share price has increased 41.2% compared with the industry’s growth of 35.3%.
Currently, the Zacks Consensus Estimate for ABB’s earnings is pegged at 70 cents per share for 2020 and $1.03 for 2021, suggesting growth of 9.4% and 6.2% from the respective 60-day-ago figures.
ABB Ltd Price and Consensus
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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