ABB will acquire GE Industrial Solutions, GE’s global electrification solutions business, for $2.6 billion. The transaction will be operationally accretive in year one. ABB says it expects to realize approximately $200 million of annual cost synergies in year five. As part of the transaction, ABB and GE agree to establish a long-term, strategic supply relationship for GE Industrial Solutions products and ABB products that GE sources today. GE Industrial Solutions has customers in more than 100 countries and an established installed base with strong roots in North America, ABB’s biggest market, according to the company. GE Industrial Solutions is headquartered in Atlanta, Georgia and reportedly has about 13,500 employees around the world.
GE Industrial Solutions will be integrated into ABB’s Electrification Products (EP) division. Included in the acquisition is a long-term right to use the GE brand, according to the company. ABB will retain the GE Industrial Solutions management team and build upon its experienced sales force. After closing, the 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% during 2020, according to the company.
ABB’s EP division offers a comprehensive portfolio of low- and medium-voltage products and solutions for a “smarter, more reliable flow of electricity from substation to socket.”
Given this transaction, ABB reports that it has decided to put the previously announced share buyback program on hold.
For more information, visit: www.abb.com
