ABB shores up electrification business with $2.6B GE unit purchase
ABB said it plans to acquire General Electric’s electrification solutions business, GE Industrial Solutions, for $2.6 billion.
ABB expects to realize about $200 million of annual cost synergies in the fifth year after the transaction closes.
- The transaction is expected to close in the first half of next year, subject to customary regulatory clearances.
ABB’s acquisition of GE Industrial Solutions aims to increase the Swiss company’s presence in the North American market for electrical power, motor and lighting control, and protection and distribution products. GE Industrial Solutions designs, sells and maintains electrical solutions for businesses and utilities.
In 2016, GE Industrial Solutions had revenues of about $2.7 billion, with an operational EBITDA margin of about 8%.
The move signals that after four years of restructuring, ABB is trying to catch up with Schneider Electric, the segment market leader. The acquisition would expand ABB’s offering of critical power, transformers and related services for customers such as hospitals, data centers and refineries.
In a conference call with journalists, ABB CEO Ulrich Spiesshofer said he is prepared to offer support and “oxygen” to reverse waning market share and years of under-investment at the business.
“It was a non-core business, and what happens with unloved children is they might not get the right level of attention to be nurtured or get going,” Spiesshofer said.“We know what needs to be fixed, but we are very confident this business will prosper as part of ABB.”
- Seeking alpha ABB to acquire GE Industrial Solutions for $2.6 billion
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