Swiss engineer ABB snaps up GE industrial solutions business for $2.6bn

 
Courtney Goldsmith
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ABB is looking to penetrate the US market better (Source: Getty)

Swiss engineering giant ABB agreed to buy General Electric's (GE) industrial solutions business for $2.6bn (£1.9bn) in a bid to strengthen its number two global position in electrification.

The deal with the US-headquartered company will also bolster ABB's access to the North American market.

GE's electrification solutions business employs 13,500 and in 2016 it made revenues of around $2.7bn.

Read more: General Electric to combine oil and gas operations with Baker Hughes

ABB expects to realise $200m of annual cost synergies in year five, but it said it would put a previously announced $3bn share buyback programme on hold due to the transaction, which is set to close in the first half of 2018.

ABB chief executive Ulrich Spiesshofer said the deal will create significant value for shareholders.

He added: “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 centre 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 has faced pressure from activist investor Nelson Peltz’s Trian Fund Management to sell off assets and focus on higher-margin businesses.

Read more: ABB will take a multi-million dollar charge due to fraud in South Korea

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