ABB completes divestment of Mechanical Power Transmission division

November 8, 2021 1:53 pm

ABB has completed the divestment of its Mechanical Power Transmission division (Dodge) to RBC Bearings Incorporated, for $2.9 billion in cash.

With the divestment, ABB has completed the first of the three previously announced exits from divisions. It is an important milestone in ABB’s strategy of active portfolio management and further strengthens its balance sheet.

ABB expects to book a non-operational pre-tax book gain of approximately $2.2 billion on the sale of Dodge in the fourth quarter of 2021. In addition, ABB expects to record an expense of approximately $200-250 million for income taxes and pay cash taxes of approximately $400 million due to the transaction. In line with the company’s capital allocation priorities, ABB plans to use the proceeds from the transaction to fund organic growth, pay a rising, sustainable annual dividend per share over time, make value-creating acquisitions and if applicable return additional capital to shareholders through share buy backs.

The transaction creates a leading manufacturer of highly engineered, performance-critical bearings and motion control components. Dodge has roughly 1,500 employees’ worldwide and achieved revenues of approximately $600 million for the twelve months ending June 30, 2021, of which more than 90 percent were generated in the Americas. During that period, the Operational EBITA margin1 was approximately 23 percent.

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