Industrial Goods Updates
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Bjorn Rosengren’s plan to have the cylinders fired at ABB is accelerating. The Swiss-Swedish industrial conglomerate he manages has confirmed the sale of $ 2.9 billion for its mechanical power transmission industry Dodge – not related to the vehicle brand – with the American RBC Bearings.
The sale is the first of three ventures that ABB plans to undertake. European industrial companies are undergoing a unbundling process to release trapped value. It is accelerated by investor activism. ABB itself has been targeted by Investor AB and Cevian in recent years.
The group hopes to rekindle investor interest by focusing on electrification. It also wants to increase ebita margins to 16 percent by 2023. Investors, encouraged by Rosengren’s impressive record at Scandinavian engineers Wartsila and Sandvik, have climbed on board since setting out plans on capital market day in November.
The healthy price that Dodge insures shows confidence is justified. RBC pays nearly five times overdue sales, twice as much as most mechanical engineering companies recommend. ABB’s power conversion and separate turbocharging companies are as follows. The latter, with an annual revenue of about $ 800 million, is the largest and can be spelled out this year if a decent offer is not obtained from a dealer.
In addition, ABB plans to eliminate a minority stake in its electric vehicle charging industry. It could be worth $ 3 billion, based on the multiple pre-sales multiple that peers pay.
ABB uses small but fast-growing transactions to offset accumulated revenue. This includes the recent acquisition of ASTI Mobile Robotics for mobile robots with $ 50 million in annual revenue.
The redevelopment of the industrial giant creates the desired buzz. ABB’s shares have risen by half since November, beating rival Siemens and Schneider Electric by almost two-fifths. At 25 times advance earnings, it is now just as valued as ever before and carries a premium for both peers. There is little room for error when the sparks start to stick out.
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