July 9, 2020: Japanese multinational conglomerate Hitachi and ABB, the Switzerland-based technology company, on July 1 completed a $6.85 billion transaction that gives Hitachi 80.1% of ABB’s Power Grids business, with an option to take over 100% after 2023.
The deal has resulted in the formation of a new company, Hitachi ABB Power Grids, which will include ABB’s Grid Edge Solutions business.
Bloomberg, the news agency, said the transaction, which has been on the table since an agreement was signed in December 2018, would be Hitachi’s biggest ever corporate deal as it moves away from its nuclear plant business to develop electricity networks.
Claudio Facchin, the head of Power Grids business with ABB, has been appointed CEO of the new firm. Hitachi executive vice president Toshikazu Nishino is chairman.
“Today’s announcement marks an important turning point in the history of ABB,” said Peter Voser, chairman of the board of ABB.
“Since announcing our intention to divest Power Grids to Hitachi, ABB has made significant progress in becoming a more customer-focused and simplified organization. We believe Hitachi is the best owner for Power Grids and its next stage of development, building on the solid foundation achieved under ABB’s previous ownership.
“ABB remains committed to using net cash proceeds from the transaction for a share buyback programme.”
A key part of growth in the new Hitachi ABB Power Grids organization is storage, says Maxine Ghavi, senior vice president and head of the Grid Edge Solutions business with ABB.
“Our choice of battery type/technology is matched to the right application. From our perspective, it’s about what brings the highest value at the system/solution level,” she said.
“The joint venture opens new ways to develop the core competencies of the two organizations, which are highly complementary. Our focus includes customers across utilities, commercial and industrial and communities, whether grid connected or off-grid (islands and remote communities).”
Globally, ABB’s Grid Edge Solutions already has 500MW installed, and the JV will inevitably expand this geographical reach.
“It also opens greater access to Japan, which is home to Hitachi and the third largest economy in the world,” she said. “For the battery energy storage business we are excited about our expanded capabilities, especially around digital and service offerings.
“Both the market and the entire energy transformation are accelerating faster than we have ever seen before. Through the new JV, and ultimately the combined portfolio in digital and energy platforms, we are able to increase resilience and efficiency and unlock new business models.”