ABB to Keep Power Grid Unit Despite Calls for Spinoff -- Update

By Brian Blackstone 

ZURICH--Swiss engineering giant ABB Ltd. said Tuesday that it plans to buy back up to $3 billion of its shares from 2017 through 2019, and that it would retain its power grids unit despite recent calls from large shareholders that it be spun off.

The share buyback "reflects the company's confidence and the continued strength of ABB's cash generation and financial position," the company said.

The company reaffirmed its aim to generate 3% to 6% annual revenue growth from 2015 to 2020.

ABB also said that "the transformation of power grids under ABB ownership will unlock maximum shareholder value compared to other ownership options such as sale, [initial public offering], spinoff or joint venture."

The Wall Street Journal reported last month that two top shareholders in ABB--Swedish activist fund Cevian Capital and U.S.-based Artisan Partners--were urging the engineering giant to spin off its power-grids unit to streamline operations and raise shareholder value.

"In our strategic portfolio review we have listened carefully to all stakeholders and all expressed views," ABB Chief Executive Ulrich Spiesshofer said Tuesday.

"After a very thorough and detailed process, supported by leading advisers, we have concluded that the continued transformation of power grids under ABB's ownership creates the highest value for our shareholders and customers," he said.

Write to Brian Blackstone at [e-mail]

(END) Dow Jones Newswires

October 04, 2016 01:50 ET (05:50 GMT)

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