ABB chief leaves because of leadership differences after recovery
ABB Ltd, the Swiss-Swedish electrical engineering giant, on Wednesday announced the abrupt departure Chief Executive Fred Kindle because of "irreconcilable differences" after helping the company recover from previous problems.
13 February 2008
ZURICH - ABB Ltd, the Swiss-Swedish electrical engineering giant, on Wednesday announced the abrupt departure Chief Executive Fred Kindle because of "irreconcilable differences" after helping the company recover from previous problems.
The company also said its earnings report, to be released Thursday, would show that in the fourth quarter net profit surged to US$1.8 billion, up from US$422 million in the year-earlier period as the company profited from the sale of a noncore unit.
ABB said it will double its dividend to CHF0.48 francs per share and launch a US$2 billion share buyback.
Kindle has headed the company for three years as it rebuilt from near bankruptcy in 2002 stemming from costly asbestos claims against the company's acquisitions in the United States.
The departure could mark the beginning of a renewed round of takeovers, analysts said, but warned that ABB's past troubles were closely linked to an aggressive acquisition spree during the 1990s that went awry.
ABB's stock closed down 5.1% at CHF26.04 on the Zurich exchange.
Kindle "is leaving the company due to irreconcilable differences about how to lead the company," ABB said, adding that it had launched a search for a successor. It said that Chief Financial Officer Michel Demare would lead the company in the meantime.
Chairman Hubertus von Gruenberg declined in a conference call to go into the reasons for Kindle's departure.
"The board is very thankful to Fred Kindle for driving the company to the extraordinary level of performance it achieved over the last three years," von Gruenberg said. "He successfully streamlined and strengthened the company's operations around the world."
The company has benefited from a boom in global purchases of its products, such as large-scale power installations and automation for a broad array of industries.
Gruenberg said the company is looking for a new chief executive with acquisition experience. That could mark the beginning of a renewed round of deals.
ABB's past troubles were closely linked to an aggressive buying spree that included the purchase of US-based Combustion Engineering, which later cost ABB more than US$2 billion in asbestos-related claims.
Kindle, a Liechtenstein-born engineer, took the helm at ABB after the company went through a massive restructuring under former CEO Juergen Dormann. Dormann helped the company avoid bankruptcy in 2002 by cutting thousands of jobs, shedding noncore units and tapping fresh shareholder funds.
Since then the company has evolved into one of the world's most profitable engineering companies as global demand for power distribution networks and industrial robots booms.
Under Kindle, ABB pursued only small acquisitions even though it had the means to make transformative deals. The company is sitting on a cash pile estimated at about US$4 billion and could take on up to US$10 billion in debt to fund growth.
Its surplus funds have put pressure on the company to seek acquisition targets. Last year, Kindle said the company had set its sights on more than 100 potential takeover candidates, but it abstained from bidding due to high prices.
But even as prices have fallen amid the global credit squeeze, ABB has failed to find a suitable acquisition target.[Copyright ap 2008]