L&T Seals $2.1 Billion Deal to Sell Electrical Unit to Schneider Electric SE

By Sharada Prahladrao

Acquisition or Partnership

India’s Larsen & Toubro (L&T) has agreed to sell its electrical and automation business for $2.1 billion (140 billion rupees), in an all-cash deal, to Schneider Electric SE.  Schneider has formed a consortium with Singapore’s state investment firm Temasek Holdings for the transaction. Under the proposed deal, both partners will make fresh investments in Schneider’s wholly owned subsidiary, Schneider India, which in turn will buy out L&T Electrical & Automation.   After the transaction is completed, Schneider Electric will have a 65 percent stake in the company, while the remainder will be held by Temasek.

Schneider will combine the business it is buying with its low voltage and industrial automation products business in India. Schneider Electric also has a listed Indian subsidiary, Schneider Electric Infrastructure Ltd., in which the French multinational owns a 75 percent stake.

L&T has decided to divest its electrical and automation business to Schneider Electric SE as the conglomerate continues to prune the number of business lines it operates across.  The deal includes all segments of its electrical and automation business except marine switchgear and servowatch systems.  According to L&T, this business did not fit into their long-range planning; as they are moving into more infrastructure, construction, EPC, big product manufacturing and services.

Keywords: L&T, Schneider Electric SE, Electrical and Automation, ARC Advisory Group.

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