Larsen & Toubro (L&T) has announced the closure of the strategic divestment of its Electrical & Automation (L&T E&A) business to Schneider Electric, a global player in energy management and automation.
The divestment deal, announced in May 2018, has been completed after receiving the requisite regulatory approvals. The divestment is in line with L&T’s stated goal of unlocking value for future growth, according to a communication from the company. L&T’s E&A business, 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 business, is transferred to Schneider Electric. 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.
About 5,000 employees of the E&A business will become part of Schneider Electric’s global family. 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.
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 includes ports, insurance, road concessions and other businesses and will further strengthen the balance sheet, the company’s statement added.
Commenting on the closure of this divestment, A.M. Naik, Group Chairman, Larsen & Toubro, said: “The closure of divestment of the E&A business is a key milestone in our stated long-term strategy. We truly believe that this deal with Schneider Electric is a win-win for our employees, business partners, and shareholders.”
S. N. Subrahmanyan, CEO& MD, Larsen & Toubro, said: “This all-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 business. The deal was a complex M&A transaction involving slump sale of the domestic business and share purchase transfer. This is in sync with our strategy to look at L&T in broadly three areas — EPC Construction & Projects, Manufacturing & Defence and Services.”