Published on September 26th, 2017 | by Kyle Field0
ABB Buys GE’s Industrial Solutions Business, Pushes Into North American Market
September 26th, 2017 by Kyle Field
ABB has announced the acquisition of GE’s Industrial Solutions business, which expands ABB’s existing presence in the space while divesting a non-core segment of the GE portfolio.
The $2.6 billion acquisition improves ABB’s #2 position in electrification and provides it with much needed relationships and an installed equipment base in North America, ABB’s biggest market. Adding the GE Industrial Solutions business to ABB’s existing base expands ABB’s footprint in the lucrative market and folds in new partnerships that will improve its ability to scale globally as well. The purchase includes formalizing a long-term, strategic supply relationship for ABB products between the two companies.
ABB believes it can squeeze $200 million in synergies out of the deal in the first 5 years by integrating overlapping functionalities of the two previously rival businesses. In 2016 alone, GE Industrial Solutions racked up total sales of $2.7 billion worth of base infrastructure equipment, including switchgear, circuit breakers, components for lighting control, and large-scale power supply equipment designed for larger facilities.
Tarak Mehta, President of ABB’s EP division, said of the deal: “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.”
Interestingly, the deal includes long-term access for ABB to use the GE brand, presumably for components in the ABB Electrified Products and GE Industrial Solutions space. GE Industrial Solutions is headquartered in Atlanta, Georgia, with a total of nearly 13,500 employees around the world. Moving forward, ABB will tap into the GE team to identify synergies within existing markets as well as opportunities to leverage existing GE partnerships to further expand ABB’s reach around the world.
As part of the deal, ABB has suspended a previously announced $3 billion share buyback program.