Larsen & Toubro (L&T) has announced the closure of its electrical and automation business (L&T E&A) to Schneider Electric, for a cash consideration of Rs 14,000 crore and the fund received by the company will be used as capital allocation.
The deal was proposed back in May 2018 and is completed now after the regulatory approvals and other specific conditions. AM Naik, Group Chairman, Larsen & Toubro said that the company’s exit from the electrical and automation business is a part of long-term strategic portfolio review. “We believe Schneider Electric is the right partner to grow the business that L&T has 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,” said Naik.
The company’s E&A business had a wide range of medium and low voltage switchgear, electrical systems, energy management systems, industrial and building automation solutions, metering solutions and projects and services businesses and its manufacturing facilities in Navi Mumbai, Ahmednagar, Coimbatore, Vadodara and Mysore in India and other subsidiaries in UAE, Malaysia, Kuwait and Indonesia which will be now transferred to Schneider Electric. Over the past five years, the company has its strategic focus on the EPC and Services business and; it has exited from several businesses including its disinvestment from its stake in ports, road concession and insurance.
Schneider Electric said that the company would combine its Schneider Electric India’s Low Voltage and Industrial Automation Product business with L&T’s Electrical and Automation Business and would own 65% of Schneider Electric India Private Ltd. (SEIPL). In contrast, the remaining stake will be owned by a global investment company, Temasek.