ABB, Zurich, Switzerland, plans to sell its high-voltage cables business unit to Danish wire and cable manufacturer NKT Cables in a deal that values the business at €836 million ($934 million). The business is part of ABB’s Power Grids division, which has been undergoing a strategic review for the past year and over which ABB has recently come under pressure from activist investors to divest.
NKT Cables, based in Brøndby Municipality, Denmark, designs, manufactures and supplies power cables for low-, medium- and high-voltage solutions mainly in the alternating current (AC) market. It has major production facilities in Europe and China as well as sales offices around the world, and employs around 3,200 people. In 2015, revenue was €1.2 billion, according to an ABB release.
“We are combining two strong cable portfolios rooted in a shared Nordic heritage that will be more competitive on a larger scale under NKT Cables’ ownership, while maintaining access to supply through a long-term strategic partnership,” said ABB CEO Ulrich Spiesshofer. “The combination of our niche cable system business with the strength of NKT Cables demonstrates our commitment to active portfolio management, a key element of our Next Level strategy.”
ABB’s high-voltage cable technology and manufacturing as well as service footprint is highly complementary with NKT Cables’ activities, making the combined business well suited to serve global demand for long-distance power transmission cable systems.
“ABB’s high-voltage cable business will add considerable strength to our portfolio and bring us a world-class manufacturing operation. We will leverage the technology, domain competence and highly skilled workforce to grow this business,” said Michael Hedegaard Lyng, President and CEO of NKT Cables. “We look forward to ramping up our long-term partnership that will serve future projects all around the world.”
ABB’s cable system business offers turnkey solutions including design, engineering, supply, installation, commissioning and service. It had adjusted standalone revenues of $524 million in 2015, employs around 900 people, and has state-of-the art manufacturing and R&D capabilities for high-voltage submarine and underground cables in Karlskrona, Sweden. The transfer of assets also includes a new, cutting-edge cable-laying vessel, currently under construction. With experience of over a century, the business serves a range of applications and has commissioned hundreds of alternating current and direct current links around the world.
“As part of the strategic partnership, ABB and NKT Cables will work together on future projects to access market opportunities in areas like sub-sea interconnections and Direct Current (DC) transmission links”, said Claudio Facchin, president of ABB’s Power Grids division. “This transaction will simplify and focus the Power Grids portfolio.”