ABB buys GE unit for $2.6 bln to boost North American business

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ABB will pay just under one times GE Industrial Solutions sales of $2.7 billion and about 12 times the unit's earnings before interest, taxes, depreciation and amortization (Ebitda) of $208 million. "We we continue to shift ABB's center of gravity.by strengthening competitiveness, mainly in the North American market, and lowering risk with an early-cycle business".

Swiss engineering giant ABB agreed to buy General Electric's (GE) industrial solutions business for $2.6bn (£1.9bn) in a bid to strengthen its number two global position in electrification.

ABB said it would finance the deal - likely its last for some time - with cash and did not need to raise equity capital.

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As part of the transaction, ABB and GE have agreed to establish a long-term, strategic supply relationship for GE industrial solutions products and ABB products that GE sources today. "And then afterwards, we will make this business bigger and better", said ABB Chief Executive Ulrich Spiesshofer.

The industrial unit makes products like power supply equipment, lighting components, switches, and more.

"This combination brings together two global businesses with a broad complement of electrical protection and distribution assets", said GE CEO John Flannery. ABB values our people, domain expertise, and our ability to operate in the segments where we have depth and experience.

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For GE, the transaction marks the first major portfolio change under CEO John Flannery, who took over on August 1 and is trying to reverse this year's biggest stock slide on the Dow Jones Industrial Average. GE has also put its iconic light-bulb manufacturing operations on the market.

Flannery, who handled mergers and acquisitions for GE in 2013 and 2014, has said he'll outline his plans for the Boston-based company and its portfolio in November. GE shares closed Friday at $24.87 and are indicated 0.1% higher in premarket trading. The price target range is $21 to $36.

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