L&T finalizes the sale of its electrical and automation activities to Schneider Electric, Energy News, ET EnergyWorld

New Delhi: Engineering and construction giant Larsen et Toubro announced Monday that it has finalized the strategic sale of its electrical and automation activities to Schneider Electric. This decision will see India become the third country in terms of turnover for Schneider Electric. Thus, approximately 5,000 employees of the electrical and automation activities of Larsen and Toubro will be integrated into the more than 2,000 employees of Schneider Electric.

Although the size of the deal was not disclosed, L&T had signed a definitive pact with Schneider Electric in 2018 to sell its electricity and automation business for a cash consideration of Rs 14,000 crore, in the part of its long-term non-core business exit strategy.

Larsen and Toubro (L&T), India’s leading engineering, technology, construction and financial services conglomerate, today announced the completion of the strategic divestiture of its power and automation (E&A) business to Schneider Electric, a global player in energy management and automation, “the company said in a statement.

The large and complex divestiture agreement, the only one of its kind in India announced in May 2018, was concluded after receiving the required regulatory approvals and fulfilling the necessary conditions, he said.

The divestiture is in line with L & T’s stated objective of unlocking value for future growth.

L&T continuously assesses its business portfolio and makes capital allocation decisions with a long-term perspective, the company said and added that its exit from the E&A business is part of the strategic portfolio review process. .

Commenting on the closing of this divestiture, L&T Group President AM Naik said: “The closing of the divestiture 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 minimal disrupting the sprawling customer base and doing everything amid the stresses of a pandemic. ”

Naik said the company believes Schneider Electric is the right partner to grow the business, which L&T has nurtured and grown over decades.

“We are convinced that this agreement with Schneider Electric is a win-win solution for our employees, business partners and shareholders,” he said.

Schneider Electric in a separate statement said that the combined company after the completion of this acquisition would report to Schneider Electric India Pvt Ltd (SEIPL), of which 65% of the capital is held by the French multinational Schneider Electric, while 35% of the capital is owned by global investment firm Temasek.

Schneider Electric also announced the appointment of Anil Chaudhry, current Zone President and Managing Director of Schneider Electric India, as CEO SEIPL and Zone President India.

Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric, declared: “The merger of the electrical and automation activities of Schneider Electric and L&T brings together two large teams, highly professional and specialized in the field of energy management and automation, and passionate about technology, innovation, quality, safety, sustainability and social responsibility. ”

This new merged company will serve India’s priorities: Make in India for India and the rest of the world, Digital India, Skill India, Sustainable Energy, Smart Cities and Infrastructure for Self-Sufficiency, to bring tremendous value to customers. and to stakeholders, employees, partners, suppliers and the community in which the business operates, said Tricoire.

“We are also proud to partner with Temasek, who brings his in-depth knowledge of India, and his support to help develop the company’s export. This major strategic decision will make India the third largest Schneider Electric company in the world, and one of Schneider’s four main global hubs for global R&D, global manufacturing, ”he said .

The company “will also continue to develop the already significant exports from our Indian factories”, he said and added “Anil Chaudhry will lead the new entity as CEO and bring his deep expertise in digitization and electrification as well as his passion. for the digital cause. solutions for efficiency and sustainability “.

SN Subrahmanyan, CEO and Managing Director, Larsen and Toubro said, “This cash deal will help us create a much stronger balance sheet, thereby creating long-term value opportunities for our stakeholders by focusing on key aspects of the company. ”

The deal was a complex merger and acquisition transaction involving a plummeting sale of the domestic business and a transfer of share purchase, he said, adding that this was in line with our strategy. consisting of reviewing L&T in three general areas, construction and EPC projects, manufacturing and defense and services.

L & T’s E&A activity with its wide range of low and medium voltage switchgear, electrical systems, industrial and building automation solutions, energy management systems, metering solutions and projects and services is transferred to Schneider Electric.

Schneider Electric will use the associated brand badges for a specified period as the brand is very popular and enjoys strong brand recall in the switchgear market.

E&A manufacturing facilities at Navi Mumbai, Ahmednagar, Vadodara, Coimbatore and Mysuru in India and associated subsidiaries in UAE, Kuwait, Malaysia and Indonesia are also transferred to Schneider Electric.

Given the pending local approvals, the Saudi Arabia subsidiary, L&T Electrical & Automation Saudi Arabia Company Limited (LTEASA), will be transferred to Schneider once the required regulatory approvals are in place, the company said.

L&T, in the last five years, in accordance with its strategy of concentrating on the EPC activity and services, has divested several activities. The recent divestiture of its stake in ports, insurance, road concessions and other businesses has all unleashed value and this deal with Schneider Electric will further strengthen the balance sheet, the company said.

Shardul Amarchand Mangaldas (SAM) Legal Advisors, Ernst & Young (EY) LLP and Arpwood Capital acted as advisers to L&T in this transaction.

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