ABB to acquire GE Industrial Solutions
By Manufacturing AUTOMATION
By Manufacturing AUTOMATION
Sep. 25, 2017 – ABB today announced the acquisition of GE Industrial Solutions, GE’s global electrification solutions business, for $2.6 billion; the transaction will be operationally accretive in year one.
Headquartered in Atlanta, Ga., GE Industrial Solutions has about 13,500 employees around the world and has an established installed base with strong roots in North America, ABB’s biggest market.
ABB expects to realize approximately $200 million of annual cost synergies in year five, which will be key in bringing GE Industrial Solutions to peer performance, it says. As part of the transaction and overall value creation, ABB and GE have agreed to establish a longterm, strategic supply relationship for GE Industrial Solutions products and ABB products that GE sources today.
“With GE Industrial Solutions, we strengthen our Number 2 position in electrification globally and expand our access to the attractive North American market,” said ABB CEO Ulrich Spiesshofer. “Combined with the longterm strategic supply relationship with GE, this transaction creates significant value for our shareholders. Together with the GE Industrial Solutions team, we will execute our well-established plans in a disciplined way to bring this business as part of the global ABB family back to peer performance. With this next step of active portfolio management, we continue to shift ABB’s centre of gravity, in line with our Next Level strategy, by strengthening competitiveness, mainly in the North American market, and lowering risk with an early-cycle business.”
ABB’s EP division delivers more than 1.5 million products to customers around the world everyday through a global network of channel partners and end-customers. EP offers a portfolio of low- and medium-voltage products and solutions for a “smarter, more reliable flow of electricity from substation to socket.”
GE Industrial Solutions will be integrated into ABB’s Electrification Products (EP) division, resulting in a “unique global portfolio and very comprehensive offering” for North American and global customers. Included in the acquisition is a longterm right to use the GE brand. ABB will retain the GE Industrial Solutions management team and build upon its sales force. After closing, this transaction will have an initial dampening effect to EP’s operational EBITA margin. ABB commits to returning EP to its target margin corridor of 15-19 percent during 2020.
“This combination brings together two global businesses with a broad complement of electrical protection and distribution assets,” said John Flannery, CEO of GE. “ABB values our people, domain expertise, and our ability to operate in the segments where we have depth and experience. GE will also benefit through an expanded strategic supply relationship with ABB as the two companies work together.”
Earlier this year, ABB announced it reached an agreement to acquire Bernecker + Rainer Industrie-Elektronik GmbH (B&R) headquartered in Eggelsberg, Austria. The purchase price was not disclosed.