GE Industrial Solutions, the company’s global electrification solutions arm, will be purchased by ABB for $2.6 billion.
The division, which provides electrical equipment for industrial use, recorded annual revenues of approximately $2.7 billion and delivers to more than 100 countries.
As part of the transaction, 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.
“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.”
“This combination brings together two global businesses with a broad complement of electrical protection and distribution assets,” said John Flannery, CEO of GE. “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.”
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 sales force.
ABB expects the transaction to close in the first half of 2018.
The New York Times indicated the move came as GE has come under pressure from hedge fund Trian Fund Management to reduce costs. Additionally, GE’s new CEO, John L. Flannery, has pledged to accelerate cost cutting.