Atlanta, Georgia-based GE Industrial Solutions, with a staff of 13,500 people, offers circuit breakers, switchgear, invertors, convertors, transformers and other power equipment.
ABB will combine GE Industrial Solutions in its Electrification Products division and this is claimed to form a unique global portfolio with a comprehensive offering for North American as well as global customers.
ABB said it expected to realize about $200 million in annual savings within five years after the transaction and has agreed to a long-term supply relationship with G.E.
ABB will fund the deal with existing cash, and will put on hold a previously announced share buyback programme.
"The key rationale of the integration is, first we will make this business better". In 2016, Industrial Solutions had sales of about $2.7 billion, with an operating margin of some 8 percent.
The purchase adds to the more than 470 acquisitions already agreed by European buyers for United States businesses so far this year - the busiest year-to-date for such deals since 2008, according to analysis of data from Dealogic.
Swiss robotics and energy grid conglomerate ABB Ltd.
Spiesshofer said he agreed to the transaction only after striking a supply partnership where ABB and GE will increase buying and selling from each another. "With the supply partnership, the economics at the price of 0.9 times revenue is working".
"GE Industrial Solutions isn't in top shape, so ABB has its work cut out for it", said Zuercher Kantonalbank analyst Richard Frei.
The deal is the latest acquisition this year by ABB.
Credit Suisse and Dyal Co, a boutique owned by former Goldman Sachs banker Gordon Dyal, are acting as financial advisers to ABB, according to the company's statement.
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