ABB signs po­ten­tial $1.9 bil­lion deal for power grids prod­ucts in China

Business a.m. - - WORLD BUSINESS & ECONOMY -

ABB’S ABBN.S POWER GRIDS busi­ness has signed deals that could be worth around $1.9 bil­lion to sup­ply power trans­mis­sion equip­ment to util­ity com­pa­nies in China, a per­son fa­mil­iar with the sit­u­a­tion said.

Clau­dio Facchin, the head of Power Grids, signed mem­o­ran­dums of un­der­stand­ing with Chi­nese com­pa­nies in­clud­ing State Grid Cor­po­ra­tion of China and China South­ern Power Grid ear­lier this month, the source said.

Reuters says a spokesman for ABB con­firmed the agree­ments, but de­clined to com­ment on the fi­nan­cial de­tails.

The agree­ments will bol­ster ABB’s Power Grids divi- sion as the Swiss en­gi­neer­ing group seeks a buyer for the busi­ness.

The China deal in­cludes dig­i­tal soft­ware and com­po­nents for high volt­age di­rect cur­rent sys­tems used to trans­mit elec­tric­ity over long dis­tances, the source said.

De­liv­er­ies could in­clude com­po­nents for a 1,200-km (746 miles) high volt­age power line be­tween In­ner Mon­go­lia and Shan­dong prov­ince.

Reuters re­ported last week that ABB was in ad­vanced talks with three suit­ors for the Power Grids di­vi­sion, which could be worth around $11 bil­lion in­clud­ing debt.

A source told Reuters this week that Ja­pan’s Hi­tachi (6501.T) is the fron­trun­ner to buy the busi­ness.

A de­ci­sion to sell Power Grids, which makes trans­form­ers and sub­sta­tions for trans­mit­ting elec­tric­ity, marks a re­ver­sal for ABB after it de­cided to keep the busi­ness two years ago de­spite calls from some share­hold­ers to sell.

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