ABB division attracts interest from industry buyers: sources

By Arno Schuetze and John Revill

FRANKFURT/ZURICH (Reuters) - ABB's clutch and transmission manufacturer Dodge had already attracted interest from potential bidders before the Swiss engineering group announced it was exiting the business, people familiar with the matter told Reuters on Thursday.

Dodge, which has annual sales of $575 million, is one of three businesses put up for disposal on Thursday, along with ABB's power conversion and turbocharger units.

Several industry peers looked into buying U.S.-based Dodge before it was formerly put up for disposal, and are expected to be in the running when ABB starts its auction early next year, the sources said.

The business, which has profit margins well above the group target level of 14% to 16%, has attracted interest from U.S. engineering companies Timken (NYSE: TKR), Regal Beloit (NYSE: RBC) and Rexnord (NYSE: REX), the sources said.

German automotive supplier Schaeffler and Swedish ball bearing manufacturer SKS are also in the frame, along with financial investors, they added.

Dodge, which makes products including bearings used in industrial food processing operations and belted drives for conveyors in giant coal mines, is likely to carry a price tag of around $1.5 million, two people familiar with the industry told Reuters earlier, and could be the first of ABB's business to be sold.

The power conversion business, which has sales of $375 million, is likely to fetch around half a billion dollars, the people said. ABB had already tried to sell the business last year without success.

Vertiv (NYSE: VRT) is the business's main peer in the market, but any offer could run into anti-trust issues, a source said.

ABB's turbocharger business could raise the most money for the Zurich-based company, with an expected price tag of $1.5 to $2 billion.

Chief Executive Bjorn Rosengren said he would consider floating the business on the Six Swiss exchange. Two people familiar with the matter told Reuters that Finland's Wartsila and Sweden's Alfa Laval (NYSE: ALFA) were two companies that could potentially be interested, although they had not expressed an interest yet.

ABB declined to comment. Timken, Regal Beloit and Rexnord did not immediately respond to requests for comment. Schaeffler did not immediately respond outside of regular European business hours. SKS declined to comment.

No banks have so far been given mandates to handle the disposals, the sources added.

(Reporting by John Revill and Arno Schuetze; Editing by Kirsten Donovan)

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