To Switzerland, and a beautifully engineered corporate u-turn. Zurich-based industrial group ABB Ltd. is considering a sale of its power grids business, according to Bloomberg News.
The deliberations come nearly two years after CEO Ulrich Spiesshofer ardently rejected calls from activist Cevian Capital AB for the unit be separated. Perhaps he realizes the justifications for keeping it are dwindling.
The argument for separation was always strong. ABB is a complex company with 147,000 employees. That’s a stretch for any management team at the best of times, but ABB needs particular attention. Its recent restructuring has yet to bear fruit and the stock has badly lagged peers. Despite that, the shares trade at a higher valuation than Siemens AG and Schneider Electric SE, leaving it vulnerable.
The power grid operation, which serves utilities, is the obvious candidate to be carved out. Its customer base is completely different to ABB’s other businesses in robotics and automation.
Spiesshofer said in July his decision to hang on to the operation was right, implying its approximate $1 billion of profit deserved a much higher valuation than the $4 billion to $5 billion he said others thought it was worth it two years ago.
But the CEO quickly added that the group structure wasn’t set in stone. It’s hard to imagine him saying that even six months ago.
