Following a decision by its Board of Directors, ABB announced its intention to spin off Accelleron (formerly ABB Turbocharging), its turbocharging division, by way of a dividend in kind of Accelleron Industries Ltd’s shares to ABB’s shareholders. Accelleron’s listing on SIX Swiss Exchange in Zurich is planned for October 3, and is subject to, among others, approval by ABB’s shareholders at an Extraordinary General Meeting scheduled for Sept 7, 2022.
The proposed spin-off of Accelleron represents a unique opportunity for both firms, allowing them to focus on their respective core strategies and create long-term value for their stakeholders. ABB’s shareholders will be able to realize the full value of Accelleron, while ABB further simplifies its portfolio and focus on the megatrends of electrification and automation.
Commenting on the transaction, Björn Rosengren, Chief Executive Officer of ABB, said: “After careful consideration involving a dual-track process, we have concluded that spinning off Accelleron is the best way forward – for Accelleron itself and for ABB’s shareholders. This decision also forms a key part of ABB’s active portfolio management, while allowing our shareholders to actively participate in the future growth of this Swiss champion.”
What is the market offering of Accelleron?
Accelleron will be able to concentrate on reaching its full potential in the large engine industry where the company is known as the market leader in heavy-duty turbocharging, with a compelling growth profile, high cash generation and an attractive expected dividend policy.
Accelleron’s potential is driven by its position, built on its very long track record, as a global market leader in heavy-duty turbocharging for mission-critical applications. Accelleron develops, produces and services turbochargers and large turbocharging components for engines, which enhance propulsion and increase fuel efficiency while reducing emissions.
Its products support clients in sectors including marine, energy and rail, helping to provide sustainable and reliable power and highest efficiencies. Accelleron has an installed base of over 180,000 turbochargers globally and delivers around 10,000 turbochargers every year.
The turbochargers are produced, sold and serviced by Accelleron’s ∼2,200 employees across its network of 100 service stations in approximately 50 countries worldwide. The business has a significant and increasing presence in key established and growth markets in Asia.
Accelleron is considered best-in-class when it comes to reducing fuel consumption and improving the emissions and green profile of its customers’ applications. The organisation’s outstanding globally renown technological competence is increasingly important as pressure grows on its customers to decarbonize, and will remain so, as its turbochargers can also be implemented in alternative and low-carbon fuel applications and drive systems.
What are the financial implications of the spin-off?
Accelleron’s technological pre-eminence is underpinned by market leading investments in research and development, representing approximately 7% of its total 2021 revenues.
Following the spin-off, the company expects that its strong financial profile will allow it to remain at the forefront of innovation by continuing investing in R&D and strengthening partnerships with OEM’s and end users and to offer attractive returns to its shareholders.
In 2021, Accelleron generated $756m with an operating margin of 25%. These results are comprised of resilient service revenues accounting for about 75% of 2021 revenues. It has a profitability above sector average with robust cashflow generation with Cash Flows from Operating Activities of $163m. This will allow Accelleron to adopt an attractive dividend policy.
Daniel Bischofberger, Chief Executive Officer of Accelleron, said: “Through the spin-off, we will have an even greater focus on our own operations, meeting the critical high-power propulsion needs of our clients while enabling them to achieve their environmental targets.”
“Our strong track record and financial profile position the business to be a leader in the energy transition, developing cutting-edge products and services – both now and far into the future; all while remunerating our shareholders,” Bischofberger further commented.
What are the structural changes at Accelleron?
Following the spin-off, Accelleron will be served by an experienced leadership team with deep and expertise in the turbocharging field. Daniel Bischofberger as Chief Executive Officer and Adrian Grossenbacher as Chief Financial Officer are part of the Executive Committee.
The designated Board of Directors of Accelleron will be chaired by Oliver Riemenschneider, who contributes over 35 years industry experience and previously served as CEO of ABB Turbocharging since 2011. He will be complemented by a highly experienced directors namely Monika Krüsi, Gabriele Sons, Bo Cerup-Simonsen, Stefano Pampalone and Detlef Trefzger.
Provided that the spin-off is approved at the EGM and the conditions precedent for it are met, ABB will distribute to its shareholders, on a pro rata basis, as a dividend in kind, 1 Accelleron share for 20 ABB shares held. Further information on the transaction structure and other important dates in connection with the spin-off will follow in the invitation to the EGM and in the Shareholder Information Brochure prepared by ABB in relation to this process.
ABB has scheduled a Capital Markets Day focusing for August 31, on Accelleron to provide further information on the transaction. ABB has retained Credit Suisse and Goldman Sachs International as financial advisors on the deal. Credit Suisse will be acting as listing agent.