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ABB sells its Mechanical Power Transmission division


The engineering group, ABB, announced Monday that it and U.S. bearing company RBC Bearings have completed a $2.9 billion agreement for the sale of its Mechanical Power Transmission (Dodge) division.

Throughout the past several years, ABB has extensively groomed its business. Turbocharging and Power Conversion units are still being looked at by the company.

According to a press release, ABB expects a pretax profit of 2.2 billion dollars and taxes of 400 million.

Upon closing the transaction, the company will be able to reorient its business in a more customer-centric direction.

According to Bloomberg, unnamed sources told the news outlet that the deal was imminent.

Bearings, gearboxes, and transmission components are manufactured by Dodge. It employs 1,500 people and generates sales of $600 million annually, 90% of which are generated in the Americas. EBITDA (gross operating margin) was 23%.

“This operation will further strengthen ABB’s balance sheet,” said Björn Rosengren, CEO of the Zurich-based group. According to him, the amount raised should be used to finance organic growth, the dividend and acquisitions.

The group will provide information later on the proposed sale of the Turbocharging business and the possibility of an IPO of the E-Mobility unit.

ABB has embarked on an extensive grooming of its business. In addition to the sale of its Power Grids division last year to Hitachi of Japan and now to Dodge, the company is still seeking a solution for its Turbocharging and Power Conversion units.

The announcement caused ABB’s share price to rise briefly before falling back a bit. The share price rose by 0.5% to 33.83 francs shortly before 2 p.m., against a trend of a leading SMI index down by 0.76%.

For MetaNews.


Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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