ABB acquires GE Industrial Solutions
ABB has announced it has acquired GE Industrial Solutions for $US2.6bn ($A3.3bn), which will expand ABB’s access to the North American market. The acquisition will be operationally accretive in year one and is expected to close in H1 2018.
GE Industrial Solutions, which is headquartered in Atlanta, Georgia and has approximately 13,500 employees around the world, has deep customer relationships in more than 100 countries and an established installed base with strong roots in North America, ABB’s biggest market.
ABB’s acquisition of GE Industrial Solutions is expected to result in approximately $US200m ($A254m) of annual cost synergies in year five.
As part of the transaction and overall value creation, ABB and GE will establish a long-term, strategic supply relationship for GE Industrial Solutions products and ABB products that GE sources today.
“With GE Industrial Solutions, we strengthen our number two position in electrification globally and expand our access to the attractive North American market. Combined with the long-term strategic supply relationship with GE, this transaction creates significant value for our shareholders,” says ABB chief executive Ulrich Spiesshofer.
“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.”
GE Industrial Solutions will be integrated into ABB’s Electrification Products (EP) division, allowing customers to benefit from ABB’s innovative technologies and the ABB AbilityTM digital offering, as well as GE Industrial Solutions’ complementary solutions and market access.
ABB’s EP division delivers more than 1.5 million products to customers around the world every day through a global network of channel partners and end-customers.
“This combination brings together two global businesses with a broad complement of electrical protection and distribution assets,” says GE chief executive John Flannery.
“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.”
ABB will retain the GE Industrial Solutions management team and build upon its experienced sales force.
“This acquisition strengthens our position as partner of choice for electrification globally and in North America. We look forward to working with GE Industrial Solutions’ and ABB’s customers and channel partners to create new opportunities in this highly attractive core market for our division. We have a clear integration plan to realize the synergies of this combination and to bring our combined business back into the target margin corridor during 2020,” says ABB’s EP division president Tarak Mehta.