ABB Ltd. (ABB), a leading power and automation technology company, recently closed the previously announced divestment of its Full Service business. The deal with Nordic Capital, a private equity investment company, was closed on Dec 30, 2014. However, the two entities kept the financial details under wraps.
Full Service business had been developed by ABB to complement its life-cycle service business. Over time, the business became a successful stand-alone affair with inadequate synergies toward the company’s core business line. As a result, on Aug 20, 2014, ABB had announced its decision to streamline its operations by divesting this business.
Post divesture, the Full Service business has been re-branded under the name ‘Quant.’ The new stand-alone company will act as an independent supplier of industrial maintenance services, which will facilitate its development to the maximum.
Of late, ABB has been focused on streamlining its portfolio by undertaking initiatives to restructure and optimize its businesses. The company has been implementing strategic initiatives with an aim to drive growth, while minimizing risks and augmenting competitiveness. In 2014, the company closed as many as six divestments, garnering over $1 billion of cash.
In Sep 2014, ABB announced the Next Level strategy and financial targets for the period 2015–2020. The strategy emphasizes ABB’s three focus areas of profitable growth, relentless execution and business-led collaboration. The company intends to drive profitable growth by shifting its concentration toward high-growth end markets, enhancing competitiveness and lowering risk in business models.
Additionally, ABB intends to leverage its PIE (penetration, innovation and expansion) initiatives to expand and enhance its business in high-growth sectors like utilities, industry, transport and infrastructure, among others.
However, ABB currently has a Zacks Rank #4 (Sell). Some better-ranked stocks include Pioneer Power Solutions, Inc. (PPSI), AO Smith Corp. (AOS) and Regal Beloit Corp. (RBC). While Pioneer Power Solutions sports a Zacks Rank #1 (Strong Buy), both AO Smith and Regal Beloit carry a Zacks Rank #2 (Buy).
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