Larsen & Toubro has announced the much awaited closure of its deal to sell its electrical and automation business to France headquartered-Schneider Electric, after the two companies announced the Rs 14,000 crore-deal in May 2018.
The Covid-18 pandemic had disrupted the closure of this deal which was earlier expected to be concluded in early 2020. With this all cash deal, the $ 21 billion-Indian engineering major has exited its only products business so that it can focus on its core competencies in construction and engineering and the high margin services business.
L&T Group Chairman AM Naik said that the deal is a “win-win” for the company’s employees, business partners, and shareholders.
“The closure of divestment of the E&A business is a key milestone in our stated long-term strategy. The challenge was to carve out a business of this scale, with minimum disruption to the sprawling customer base and do it all amid the constraints of a pandemic. We believe Schneider Electric is the right partner to grow the business that L&T had nurtured and grown over decades,” Naik said in a statement.
Schneider Electric said that the acquisition is a part of its strategy to expand its presence in India. The company also said that it has appointed Anil Chaudhry, the current zone president and managing director of Schneider Electric India as the chief executive officer of Schneider Electric India Private, which is owned 65% by Schneider Electric, and rest by global investment company Temasek.
Jean-Pascal Tricoire, chairman & CEO, Schneider Electric said, “This major strategic move will make India, Schneider Electric’s third largest business in the world, and one of the four major global Schneider hubs for global research and development and manufacturing. We shall also keep growing our already significant export from our Indian factories.”
L&T has been continuously evaluating its business portfolio with a long-term perspective for capital allocation. In the past, it has exited several non-core businesses like its petrol pump vending machines and cement businesses, and exited some joint ventures. More recently, it has divested its stake in ports, insurance, and road concessions.
The company said that the E&A divestment deal was complex in nature but received all requisite regulatory approvals and fulfilled all necessary conditions.
L&T’s E&A division offered a wide range of low and medium voltage switchgear, electrical systems, industrial and building automation solutions, energy management systems, metering solutions and projects and services business. Schneider Electric will use related brand insignia for a specified period to leverage on the brand’s popularity.
Schneider Electric will acquire 5,000 employees and L&T’s manufacturing facilities in Navi Mumbai, Ahmednagar, Vadodara, Coimbatore and Mysore, and related subsidiaries in UAE, Kuwait, Malaysia and Indonesia.
About Schneider Electric
Schneider Electric is leading the Digital Transformation of Energy Management and Automation in Homes, Buildings, Data Centers, Infrastructure and Industries. With global presence in over 100 countries, Schneider is the undisputable leader in Power Management – Medium Voltage, Low Voltage and Secure Power, and in Automation Systems. We provide integrated efficiency solutions, combining energy, automation and software. In our global Ecosystem, we collaborate with the largest Partner, Integrator and Developer Community on our Open Platform to deliver real-time control and operational efficiency. We believe that great people and partners make Schneider a great company and that our commitment to Innovation, Diversity and Sustainability ensures that Life Is On everywhere, for everyone and at every moment.
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