ABB has agreed to divest its Mechanical Power Transmission division (Dodge) to US-based engineering firm RBC Bearings, for a total of $2.9bn in cash.

Dodge has been operating in the design, production, and marketing of mounted bearings, enclosed gearing, and power transmission components for more than 140 years.

It offers a broad portfolio of mechanical power transmission products to surface mining, aggregates and cement, warehousing, and food and beverage industries.

Based in Greenville, South Carolina, Dodge has six manufacturing sites, with five in the US and one in China, and has around 1,500 employees.

It has generated around $600m in revenues for the last twelve months ending 30 June 2021, with more than 90% in the Americas.

ABB CEO Björn Rosengren said: “We are delighted that Dodge has found an excellent new home with RBC Bearings, where it can continue its exciting growth story.

“This transaction further strengthens ABB’s balance sheet. In line with our capital allocation priorities, we plan to first use the proceeds from the transaction to fund organic growth, pay a rising sustainable dividend per share and make value-creating acquisitions.

“Furthermore, we will give an update on our plans for the Turbocharging exit and possible listing of our E-Mobility division in due course.”

The business combination is expected to enhance capabilities, footprint, and customer access for RBC Bearings, while increasing its exposure to Dodge’s end markets.

Closing of the transaction is expected by the end of the year 2021, subject to customary closing conditions, including regulatory review.

Upon closing, the combined company is expected to become a large manufacturer of highly engineered, performance-critical bearings and motion control components.

J.P. Morgan is serving as exclusive financial advisor, while Kirkland & Ellis as legal counsel to ABB for the transaction.

In July last year, Japanese multinational conglomerate Hitachi completed the acquisition of 80.1% stake in Power Grids business of ABB for $6.85bn.