(Bloomberg) -- ABB Ltd. is selling its mechanical power transmission business to RBC Bearings Inc. as Chief Executive Officer Bjoern Rosengren swiftly overhauls the Swiss industrial giant.
RBC Bearings will pay $2.9 billion in cash to buy the unit known as Dodge, with the deal expected to close by the end of the year, ABB said Monday, confirming an earlier Bloomberg News report. Dodge also drew interest from suitors including Schaeffler AG and Timken Co., people familiar with the sale process said earlier.
ABB announced in November that it would explore options for the unit as well as its turbocharging and power-conversion businesses.
The sale indicates industry veteran Rosengren is making headway on revamping ABB’s conglomerate structure. He took the helm last year after intense pressure on the company from anchor investors including Cevian Capital to raise profitability.
Dodge’s products include mounted bearings, enclosed gearing and bushings for industrial applications. ABB acquired the business as part of its 2011 purchase of Baldor Electric Co.
Based in Oxford, Connecticut, and led by industry veteran Michael J. Hartnett, RBC Bearings makes bearings, control rods, couplings and other parts for the aerospace, construction and mining industries.
Dodge has roughly 1,500 employees globally with revenues of about $600 million in the twelve months ending June 30, of which more than 90% were generated in the Americas, ABB said.
RBC Bearings shares jumped as much as 19% in New York a record high for the biggest intra-day move since March last year. ABB rose 0.8% at 4:14 p.m. in Zurich, taking gains this year to 37%.
ABB’s CEO Rosengren said last week he hoped to sign a deal for Dodge “within a couple of weeks.” He also said an initial public offering of its electric-vehicle charging business could be readied for the fourth quarter and move ahead in early 2022. The separation of the turbocharger division has already begun and a possible spinoff could happen in the second quarter of next year.
ABB plans to use the proceeds from the sale of Dodge for “organic growth, pay a rising sustainable dividend per share and make value-creating acquisitions,” Rosengren said in the statement. “We will give an update on our plans for the turbocharging exit and possible listing of our e-mobility division in due course.”
The engineering giant last week raised its full-year guidance on revenue growth to about 10% from the previous forecast of 5% or more.
(Updates with RBC Bearings shares in 8th paragraph)
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