Schneider Electric Acquires Electrical & Automation Business of L&T

Larsen & Toubro (L&T) has successfully completed the strategic divestment of its Electrical & Automation business to Schneider Electric

One of India’s leading engineering, technology, construction and financial services conglomerates – Larsen & Toubro (L&T) has announced that it has successfully completed the strategic divestment of its Electrical & Automation (L&T E&A) business to Schneider Electric, a global player in energy management and automation.

L&T’s E&A business covers everything between 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. Post-acquisition, Schneider Electric will use related brand insignia for a specified period as the brand is very popular and has a strong brand recall in the switchgear market.

The “significant and complex divestment deal” as the firm describes it to be is one of its kind in India and was first announced in May 2018. And has now been completed after receiving the requisite regulatory approvals and fulfillment of necessary conditions. Though the size of the deal was not disclosed, L&T had inked a definitive pact with Schneider Electric in 2018 to sell its electrical and automation business for an all-cash consideration of Rs 14,000 crore, as part of its long-term strategy to exit non-core activities.

The firm has stated that the divestment is in line with its stated goal of unlocking value for future growth. It continuously evaluates its business portfolio and takes capital allocation decisions from a long-term perspective and its exit from the Electrical & Automation Business is a part of the strategic portfolio review process.

A.M. Naik, Group Chairman, Larsen & Toubro said that “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 the decades. We truly believe that this deal with Schneider Electric is a win-win for our employees, business partners, and shareholders.”

As part of the agreement, about 5,000 employees of the E&A business will become part of Schneider Electric’s global family. Further, the manufacturing facilities of E&A in Navi Mumbai, Ahmednagar, Vadodara, Coimbatore and Mysuru in India and related subsidiaries in UAE, Kuwait, Malaysia and Indonesia are also being transferred to Schneider Electric. In view of the pending local approvals, the subsidiary in Saudi Arabia, L&T Electrical & Automation Saudi Arabia Company Limited (LTEASA), will be transferred to Schneider, once the requisite regulatory approvals are in place.

L&T, over the past five years, in line with its strategy to focus on the EPC and Services business, has exited several businesses. The recent divestment of its stake in ports, insurance, road concessions and other businesses have all unlocked value and this deal with Schneider Electric will further strengthen the balance sheet.

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Ayush Verma

Ayush Verma

Ayush is a staff writer at saurenergy.com and writes on renewable energy with a special focus on solar and wind. Prior to this, as an engineering graduate trying to find his niche in the energy journalism segment, he worked as a correspondent for iamrenew.com.

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