Swiss engineering company ABB has sold a key part of its oil, gas and petrochemicals division to a group of private equity investors for $925 million (SFr1.140 billion).This content was published on July 13, 2004 - 09:18
A consortium made up of Candover Partners, JP Morgan and 3i has bought the unit, which supports the energy exploration industry.
It brings the Swiss-based engineering firm closer to the end of a major restructuring.
Cash proceeds from the sale are $800 million, which is the sale price adjusted for unfunded pension liabilities and changes in net working capital.
“Closing this sale is a decisive step in our efforts to increase focus on our core business activities and finalise our divestment programme,” commented ABB’s outgoing chief financial officer Peter Voser in a statement from the firm’s headquarters in Zurich.
The closing of the deal comes less than a week after ABB settled two bribery cases in the United States for about SFr20 million.
Two ABB subsidiaries pleaded guilty to charges of paying African and Asian officials $1.1 million to secure contracts.
The group announced a preliminary sales agreement for the so-called upstream part of its OGP business with the Candover group last October.
But the bribery case had stood in the way of finalising the deal.
The divestment includes ABB’s US-based Vetco Gray unit and its ABB Offshore Systems based in Norway. These businesses are active in more than 30 countries, employ some 8,700 people and had total revenues of $1.7 billion last year.
The sale is one of the issues that ABB wants to resolve this year as it concentrates on its power and automation technology businesses.
The group is also seeking a buyer for its downstream OGP business, which provides services to the refining industry.
Major court case
However, since this operation includes units that are involved in a major court case over asbestos liabilities in the US, the sale has been blocked until a $1.2 billion settlement offer by ABB wins court approval.
ABB has said the sale of this downstream business that centres on ABB Lummus Global, which manufactures asbestos-insulated engineering products, is on track for the end of the year.
After almost collapsing in 2002, the group has been selling off assets to reduce a multibillion-dollar debt mountain left over from a buying spree in the late 1990s.
Last year ABB cut 7,100 jobs at its worldwide operations.
swissinfo with agencies
The ABB group operates in about 100 countries and employs 113,000 people.
ABB announced a loss of $767 million in 2003, its third loss in as many years.
It made a loss of $4 million in the first quarter of 2004.
ABB has sold a key part of its oil, gas and petrochemicals business to a group of investors for $925 million (SFr1.14 billion).
It comes less than a week after ABB settled two bribery cases in the United States.
The deal brings ABB closer to the end of a major restructuring programme.
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