ABB Working With Credit Suisse, Dyal on Power Grid Options

(Bloomberg) -- ABB Ltd. is working with advisers to prepare the potential separation of its power grid unit, people familiar with the matter said, which would be a strong indication that the Swiss engineering company may divest the business worth more than $10 billion.

The Zurich-based company is receiving advice from Credit Suisse Group AG and Dyal Co. on a possible sale or spinoff of the unit, the people said, asking not to be identified because discussions are private. The board of the Swiss engineering company is likely to make a decision by the end of the year on whether to pursue a transaction, they said.

Infrastructure funds, private equity firms and some Asian rivals could be interested in the asset, though some could be discouraged by the investment, financing or regulatory requirements, the people said. ABB could retain part of the business following any transaction, the people said.

Representatives for ABB and Credit Suisse declined to comment. Dyal, the boutique founded by former Goldman Sachs Group Inc. M&A adviser Gordon Dyal, couldn’t immediately be reached for comment. While both advisory firms have been close to ABB for some time, their work on the power grids separation has picked up recently, the people said.

Shares of ABB rose 1.2 percent to 21.43 Swiss francs as of 1:34 p.m. in Zurich, paring its decline this year to about 18 percent.

A sale of the unit would meet a longtime demand of Cevian Capital AB. The activist investor became a major shareholder in ABB more than three years ago and began pushing for a breakup of the company, and particularly a separation of its power grids division. Selling it would leave ABB more focused on robotics and automation.

Chief Executive Officer Ulrich Spiesshofer, after conducting a strategic review, opted in October 2016 to keep the business, instead choosing to buy back shares and sell smaller assets in moves that have failed to placate its second-largest investor. That stance began changing this year after the value of the power grids business rebounded, people familiar said in August. The division’s implied valuation has increased to about $10.2 billion following productivity and margin gains, Bloomberg Intelligence estimated in August.

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