(Bloomberg) -- ABB Ltd. appointed industrial veteran Bjorn Rosengren to take over as chief executive officer next year and lead a sweeping overhaul of the Swiss engineer after he rejuvenated Swedish mining-equipment giant Sandvik AB.
The 60-year-old executive will take the helm in March after more than four years with Sandvik. Shares of Zurich-based ABB jumped as much as 4.4%, the most since April 17 -- when ex-CEO Ulrich Spiesshofer announced his sudden exit.
ABB locked Rosengren into a minimum five-year contract to drive expansion in robotics and a revamp that dragged out under his predecessor. ABB is looking to increase focus at its individual businesses and is selling the bulk of its power-grid division to Hitachi Ltd. for about $6.4 billion, a move pushed by activist shareholder Cevian Capital.
“I’m happy to say he committed to a minimum of five years,” Chairman Peter Voser said on a call on Monday, declining to discuss Rosengren’s financial package. Having stepped in as interim CEO, Voser added he plans to stick around for “a few more years” as chairman.
Cevian co-founder Lars Forberg said Rosengren has the “right experience and leadership style” to take ABB forward. Investor AB, the company’s largest shareholder, also applauded the appointment.
Investor Backing
“We fully support ABB’s new strategic direction with a simplified and decentralized organization,” said Johan Forssell, CEO of Investor AB. “He is the right person to lead ABB in the next phase of the company’s journey.”
Forssell highlighted Rosengren’s history of transforming the corporate culture, improving results and delivering . For his part, Rosengren said in the statement today that ABB needs to have unique technology and a digital solutions portfolio to enhance its productivity.
ABB traded 3.7% higher at 18.18 francs in Zurich as of 12:03 p.m., for a market of almost 40 billion francs ($41 billion). Sandvik shares fell as much as 2.2%, and traded 1.1% lower at 137 kronor.
Long Enough
During Rosengren’s tenure, Sandvik shares gained more than 70%. The CEO has been “instrumental” for the company’s improvement in recent years, DNB analyst Olof Larshammar said in a note. Although helped by better markets, the company improved under his watch as Rosengren unpicked an overly centralized corporate structure, implemented extensive performance reviews and benchmarked units against one another, Larshammar added.
What Bloomberg Intelligence Says:
Hiring industrials veteran Bjorn Rosengren as CEO may make analysts more optimistic about ABB’s transformation programs, given record profit at Sandvik under his tenure, but that was in a better market environment, and this may require a different approach.
--Jawahar Hingorani, BI industrials analyst
Rosengren, who holds a post-graduate engineering degree from Chalmers University of Technology in Gothenburg, spent his formative years at Atlas Copco AB, a business steeped in a culture of manager responsibility and asset-light production that has been emulated at other Nordic companies. He was also CEO of Finnish power-equipment company Wartsila Oyj.
Sandvik said its board of directors will meet Monday morning to start working on finding Rosengren’s replacement.
©2019 Bloomberg L.P.
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