ABB splashes US$2.6 billion on GE Industrial Solutions acquisition

Lloyd Doyle
September 25, 2017

Swiss engineering group ABB said on September 25 it will buy General Electric's Industrial Solutions business for $2.6 billion.

Zurich-based ABB sees potential for annual cost benefits of $200 million with the deal, which includes an agreement for long-term use of GE's brand and a strategic partnership.

Atlanta, Georgia-based GE Industrial Solutions, with a staff of 13,500 people, offers circuit breakers, switchgear, invertors, convertors, transformers and other power equipment.

ABB is buying GE Industrial Solutions in order to expand its access to the North American market, which is already the group's biggest market. It will become part of ABB's electrification products business.

GE Industrial Solutions is claimed to have earned a revenue of $2.7bn a year ago, with an earnings before interest, taxes, depreciation and amoritisation (EBITDA) of 8% and an operational EBITDA of 6%.

ABB chief executive Ulrich Spiesshofer said the deal will create significant value for shareholders.

ABB expects integration costs of $400 million.

Swiss robotics and energy grid conglomerate ABB Ltd.

GE has been under pressure from activist investor Nelson Peltz's Trian Fund Management to sell assets and focus on higher-margin businesses.

Those gains would help raise the GE unit's Ebitda margin from its current level of 8% toward the 15% to 19% target that ABB has set for its equivalent Electrification Products operations.

ABB's acquisition is one of the 10 largest Europe-US deals this year.

Credit Suisse and Dyal Co, a boutique owned by former Goldman Sachs banker Gordon Dyal, are acting as financial advisers to ABB, according to the company's statement.

Other reports by Iphone Fresh

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