The business is part of ABB’s Power Grids division, which is presently subject to a strategic review.

The deal also includes ABB HV Cables’ committed investment in a new cable-laying vessel to be delivered and paid in the first quarter of next year of €124m.

High voltage cable components play a key role in transmitting large amounts of electricity from renewable resources to the grid over large distances.

As part of its changing strategy, ABB is divesting from its cabling business.

NKT Cables designs, manufactures and supplies power cables in low, medium and high voltage categories, mainly in Alternating Current (AC).

The company has production facilities in Europe and in China and sales offices around the world. The company earned €1.2bn in revenues in 2015.

ABB said the similarities in its business model and NKT Cables' business model and their operations make it ideal to combine their businesses and serve the increasing demand for high voltage transmission of electricity over long distances.

With this acquisition, NKT Cables plans to enter high voltage Direct Current (DC) market, where is a strong potential for growth. The combined business can be strongly positioned in growing offshore wind and in the development of interconnector grid in Europe.

ABB and NKT Cables have signed agreements for future co-operation through strategic partnership in the pursuit of market opportunities in interconnectors and onshore power transmission projects.

NKT Cables president and CEO Michael Hedegaard Lyng said the access to ABB’s DC cable technology allows the company to play a key role in the development of the European grid infrastructure planned for the next 10-15 years.

ABB CEO Ulrich Spiesshofer said: “We are combining two strong cable portfolios rooted in a shared Nordic heritage that will be more competitive on a larger scale under NKT Cables’ ownership, while maintaining access to supply through a long-term strategic partnership.

“The combination of our niche cable system business with the strength of NKT Cables demonstrates our commitment to active portfolio management, a key element of our Next Level strategy.”

The transaction is expected to close in the first quarter of 2017 after securing regulatory approvals.

Image: nkt cables to acquire ABB' s cable business. Photo: Courtesy of nkt cables Group GmbH.