India-based infrastructure and engineering firm Larsen & Toubro (L&T) has agreed to divest its electrical and automation (E&A) business to French automation giant Schneider Electric for Rs140bn ($2.1bn).
Image: Schneider Electric head office in Rueil-Malmaison, France. Photo: courtesy of Schneider Electric.
Schneider Electric will acquire the L&T’s electrical and automation business, in partnership with Singapore’s sovereign fund Temasek.
The L&T’s E&A business is engaged in offering a range of low and medium voltage switchgear, electrical systems, marine switchgear, industrial and building automation solutions, energy management systems and metering solutions.
It operates manufacturing facilities at Navi Mumbai, Ahmednagar, Vadodara, Coimbatore and Mysore in India as well as in Saudi Arabia, UAE, Kuwait, Malaysia, Indonesia, and the UK.
Larsen & Toubro group chairman A M Naik said: “We believe the partnership with Schneider Electric, which has a strong product and geographic presence, would further enhance the business prospects for E&A business & its employees.”
The transaction, which is subject to customary and regulatory approvals, includes all the current business segments of E&A and excludes marine switchgear and Servowatch Systems.
Larsen & Toubro CEO and managing director S N Subrahmanyan said: “The divestment of E&A business is in line with L&T’s stated intent of unlocking value within the existing business portfolio to streamline and allocate capital and management focus for creating long-term value for our stakeholders.”
Upon completion of the deal, the acquired E&A business will be combined with Schneider Electric India’s Low Voltage and Industrial Automation Product business, in which Temasek will have 35% stake.
Schneider said that the combined business, which will have more than €1bn in revenues, is expected to create significant synergies and efficiencies by leveraging on the complementary businesses of Schneider and L&T E&A business.
Schneider Electric chairman and CEO Jean-Pascal Tricoire said: “By bringing together the Low Voltage and Industrial Automation Products Business of Schneider Electric India and L&T E&A, we are creating an innovative company in Energy Management and Industrial Automation in one of world’s largest and fastest growing economies –India.
“Our market reach in India will be further strengthened by the extensive ecosystem of partners of E&A and we will harness the strengths of both organizations to address the electrical and automation requirements of India and global market.”