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Swiss engineering firm ABB pays US$470m to offload solar business
[ZURICH] ABB will pay up to US$470 million in charges and separation costs to hand over its solar inverter business to Italy's FIMER SpA, the Swiss engineering company said on Tuesday.
The business making solar inverters, which convert direct power from solar panels into alternating current that can be fed into the electricity grid, had sales of roughly US$290 million in 2018.
ABB said it expects to take an after-tax non-operational charge of roughly US$430 million in the second quarter of 2019 with around three quarters being cash paid to FIMER.
The Zurich company said it also expects to pay up to US$40 million in separation costs.
The deal is expected to be completed in the first quarter of 2020.
ABB acquired the inverter business in 2013 when it paid US$1 billion for US solar energy company Power-One, betting that growth in emerging markets would revive a sector ravaged by over-capacity and weakening demand.
But the deal went sour, with the inverter business becoming a drag on the performance on ABB's electrification business. Following the exit, ABB said it expected the operational Ebitda (earnings before interest, tax, depreciation and amortisation) margin at its electrification division to rise by more than 50 basis points.
The solar inverters exit is the first big move by ABB chairman Peter Voser, the former head of oil company Royal Dutch Shell, since taking over as the Swiss company's chief executive in April. ABB said in December it was also selling its Power Grids business to Hitachi.