Topic: How To Invest

Spinoffs, Takeovers and Special Situations Hotline – Friday, August 31, 2018

Article Excerpt

ABB LTD. (ADR), $23.51, symbol ABB on New York, makes transformers, transmission systems and circuit breakers for electrical utilities. It also produces automation systems and robotics for industrial clients. ABB CEO Ulrich Spiesshofer has reversed his stance when it comes to the company’s power grid business. He’s now willing to consider offers for the unit, or perhaps spin it off. For the last two years, activist investor Cevian Capital, ABB’s second-largest shareholder, has called for the sale of the unit because the business accounts for just 30% of the company’s overall sales and is much less profitable than ABB’s three other segments. So far, Spiesshofer’s plan to turn around the business rather that sell it has paid off—the power grid segment is on track to make more than $1 billion in profits this year. That suggests the company’s power business is worth considerably more than its reported $4 billion to $5 billion valuation, assessed in 2016. In the second quarter, ended June 30, 2018,…