Global industrial conglomerates Siemens, Schneider Electric and Eaton Corporation have joined ABB in the race to acquire the electrical and automation division of Larsen & Toubro, two people aware of the discussions said.
Top officials of Siemens AG, including chief executive Joe Kaeser, recently met their counterparts from L&T, led by chairman AM Naik, to discuss a potential deal, said one of the people involved in the discussions. Schneider, meanwhile, has teamed up with Temasek, the Singapore national fund, to form a consortium to buy the division, deemed to be non-core for India’s top engineering firm, the second person said.
L&T is expecting Rs 14,000-18,000 crore for the division, the people said, both speaking on the condition of anonymity.
Depending upon the final valuation, L&T will either divest its entire holding or retain a minority stake that will be sold later, the people said.
L&T’s electrical and automation division is expected to give a huge leverage in India to the successful acquirer. Three of these four industrial titans — Siemens, ABB and Schneider — have listed subsidiaries in India in which the multinational giants own 75% each. Dublin-headquartered Eaton does not have a serious presence in India and is the smallest among the four.
In 2011, Eaton was engaged in bilateral discussions with L&T to acquire the business, but the talks did not fructify. This would be a re-engagement between the two.
Most European conglomerates are facing headwinds in their home markets and a slowdown in China once pegged as the most important outpost for many. The Indian economy that has been on a gradual rebound offers them a sweet spot, feel analysts.
More importantly, with a wide footprint spanning India, the UAE and Saudi Arabia, the business will offer an opportunity for them to further consolidate their presence in several emerging geographies.
Spokespeople for Siemens, Schneider Electric, Temasek, Eaton and L&T said they do not comment on speculation and rumour.
ET on June 21 reported about ABB’s interest in the business. The division had generated revenue of Rs 4,650 crore and an operating profit of a little over Rs 700 crore in 2016-17.
Company watchers said the prospects of a successful transaction are brighter this time around because the division’s plants have been segregated from the parent and real estate has been clearly demarcated at all locations.
