After numerous trials and tribulations, Swiss industrial giant ABB Ltd is taking the final step in its restructuring plan by shedding its last downstream oil and gas assets. In a deal worth nearly $1 billion, energy engineering and construction firm Lummus Global will go to Chicago Bridge & Iron (CB&I), leaving ABB to live its dream as an automation and power systems guru.
The Swiss firm, which has a long and colorful history, is going back to its late-1800s roots as an electrical equipment manufacturer for utilities and other industrial companies. After over-diversification in the 1990s led to financial strife in the next decade, the company began shedding assets, including its upstream oil and gas business (Vetco Gray), financial and insurance firms, and transportation assets.
Lummus has been a pain point for ABB in recent years due to its involvement in sticky asbestos litigation in the US. The engineering firm entered and exited Chapter 11 bankruptcy protection during 2006 to settle liabilities, paving the way for ABB’s planned divestiture. Asbestos woes from Lummus and other operations have cost ABB billions, but the company’s swift restructuring moves have kept the tide from pulling it under.
In fact, ABB has ultimately reversed its fortunes and intends to use its newfound cash surplus (estimated to be around $3 billion) to fund acquisitions aimed at bolstering its streamlined industrial technologies empire. The company has said that it will target acquisitions of all sizes in the US and emerging markets. A thorn in its side remains, however, as ABB has admitted that suspected bribery payments are under investigation.
The company plans to host a strategy session on September 5th in which those curious about ABB’s future may receive some juicy tidbits. My thoughts are that the firm has a deal waiting behind the curtains to woo shareholders and spend that dough!
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