Nearly $1 billion: ABB sells Lummus Global oil & gas process technologies to CB&I
Zurich, Switzerland—ABB agreed to sell its Lummus Global business to Chicago Bridge & Iron Co. (CB&I) for $950 million, subject to regulatory and CB&I shareholder approvals.
Zurich, Switzerland — ABB agreed to sell its Lummus Global business to Chicago Bridge & Iron Co. (CB&I) for $950 million, subject to regulatory and CB&I shareholder approvals.
[UPDATE: Sold. ABB announced Nov. 19 that this transaction was completed. ABBng. This payment will be also booked in the fourth quarter, ABB said. ]
The Netherlands-based CB&I will purchase the Lummus Global business, which had reported revenues of $988 million in 2006. Lummus with approximately 2,400 employees, provides process technologies used in the oil & gas and petrochemical industries and is a global EPC (engineering, procurement, construction) contractor.
According to ABB president and CEO Fred Kindle, “The divestment of Lummus Global is the final milestone in our strategy of focusing on our highly successful core business in power and automation technology. At the same time, we are pleased that CB&I is taking over [the business]. They are an experienced engineering, procurement and construction company, and are therefore in a very good position to further develop Lummus Global’s market activities and operations.”
ABB announced that, in connection with the divestment, it had discovered certain suspect payments in a number of countries, and has reported these to the U.S. Department of Justice and the Securities and Exchange Commission, and is cooperating fully with the authorities, while continuing internal investigations and compliance reviews. The company retains liability for potential fines and penalties.
Lummus Global claims expertise in ethylene and olefins technologies, having licensed approximately 40% of all such projects worldwide over the last decade. It says it holds a market-leading position in hydrocracking projects, has 70 proprietary technologies, more than 1,000 patents, and an established global presence, including Europe, the Middle East, Africa, China, Russia, and the U.S.
The combination of CB&I’s EPC experience and Lummus’ technology expertise creates a strategic advantage in the marketplace, CB&I says, to provide clients a full range of complementary services across the entire hydrocarbon value chain, from proprietary technology to engineering, procurement, fabrication, construction and final commissioning.
“This is a compelling strategic opportunity which will enable CB&I to better respond to the growing demand for energy infrastructure around the world,” says Philip K. Asherman, CB&I president and CEO. “The acquisition transforms CB&I into a fully integrated provider with full scale capabilities in the global hydrocarbon sector. While we expect the acquisition to be accretive to 2008 earnings per share, it is even more significant in terms of enhancing CB&I’s future growth potential. Lummus Global has established an excellent reputation over the past 100 years and we intend to fully capitalize on the company’s expertise and downstream capabilities. We are excited to welcome Lummus to CB&I.”
CB&I estimates Lummus Global will have revenues of approximately $1 billion 2007 and expects the opportunities provided by the acquisition to drive “substantial revenue and earnings growth” in 2008 and beyond. The acquisition will be funded using a combination of cash and debt, with a possible subsequent issuance of common stock following the closing, the company says.