ABB To Buy General Electric's Industrial Solutions Unit For $2.6b

ABB (ABB) announced the acquisition of GE Industrial Solutions, GE's (GE) global electrification solutions business. GE Industrial Solutions has deep customer relationships in more than 100 countries and an established installed base with strong roots in North America, ABB's biggest market. GE Industrial Solutions is headquartered in Atlanta, Georgia, and has about 13,500 employees around the world.

In 2016, GE Industrial Solutions had revenues of approximately $2.7B. ABB will acquire GE Industrial Solutions for $2.6B; the transaction will be operationally accretive in year one. ABB expects to realize approximately $200M of annual cost synergies in year five. s part of the transaction and overall value creation, ABB and GE have agreed to establish a long-term, strategic supply relationship for GE Industrial Solutions products and ABB products that GE sources today. GE Industrial Solutions will be integrated into ABB's Electrification Products division. Included in the acquisition is a long-term right to use the GE brand. ABB will retain the GE Industrial Solutions management team and build upon its experienced 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% during 2020. Given this transaction, ABB has decided to put the previously announced share buyback program on hold. The transaction is expected to close in H1 2018, subject to customary regulatory clearances. Credit Suisse and Dyal Co. acted as financial advisors to ABB, and Davis Polk & Wardwell provided legal counsel.


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