ABB to sell 19.9% stake in Hitachi Energy

The Swiss engineering group said that ZURICH ABB will sell its remaining 19.9 per cent stake, worth $1.679 billion, in the joint venture Hitachi Energy.

Hitachi has the option to buy the stake in the company, which was formed in 2020 from ABB's Power Grids business.

ABB does not anticipate any significant gain or loss as a result of the sale. ABB expects net positive cash inflows to be around $1.425 billion when the sale closes before the end of the year, pending regulatory approvals, it said in a statement.

We are delighted to have agreed on the final part of the transaction earlier than expected and on favorable terms. ABB finance chief Timo Ihamuotila said that this will strengthen our balance sheet and give us more flexibility in our capital allocation decisions.

ABB has set aside a provision of around $325 million for investigations into the Kusile power plant in South Africa, according to a statement by the company.

ABB agreed in 2020 to pay 1.56 billion rand and then $104 million to South African state power utility Eskom to settle an investigation into improper payments and compliance issues related to the project.

ABB is in talks with relevant authorities about the remaining matters related to the Kusile project in South Africa, awarded in 2015, it said.

ABB will make a non-operational provision of approximately $325 million, which will be reflected in Income from operations in the third quarter of 2022, with a similar cash flow impact expected in subsequent quarters. ABB did not believe it would need to take any additional provisions relating to these matters. It was cooperating with the authorities and hoped to reach a final settlement with them in the near term.