ABB recently announced that it will acquire GE Industrial Solutions, GE’s global electrification solutions business. ABB will acquire GE Industrial Solutions for $2.6 billion; the transaction will be operationally accretive in year one.
With about 13,500 employees, GE Industrial Solutions has customer relationships in more than 100 countries. Headquartered in Atlanta, Georgia, GE Industrial Solutions had revenues of approximately $2.7 billion, with an operational EBITDA margin of approximately 8 percent1and an operational EBITA margin of approximately 6 percent.
"With GE Industrial Solutions, we strengthen our Number 2 position in electrification globally and expand our access to the attractive North American market,” said ABB CEO Ulrich Spiesshofer. “Combined with the long-term strategic supply relationship with GE, this transaction creates significant value for our shareholders. 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 center 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. 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 percent during 2020.
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.
The transaction is expected to close in H1 2018, subject to customary regulatory clearances.