While the business unit, active in more than 100 countries, was non-core for GE, ABB noted the addition offers it significant value creation potential and will also expand its access to the North American market via an existing, sizable distribution network.
Under the deal’s terms, the pair will establish a long-term, strategic supply relationship for GE Industrial Solutions products and ABB products that GE sources today. ABB also noted that it will have long-term usage of the GE brand name.
Further, GE Industrial Solutions will be integrated into ABB’s Electrification Products (EP) division, allowing worldwide customers the most comprehensive offering.
“This combination brings together two global businesses with a broad complement of electrical protection and distribution assets,” GE CEO John Flannery said.
“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.”
“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,” added ABB EP division president Tarak Mehta.
“We have a clear integration plan to realise the synergies of this combination and to bring our combined business back into the target margin corridor during 2020.”
The acquisition, which will be operational EPS accretive to ABB in the first year, is expected to close sometime during the first half of 2018.