Larsen & Toubro has completed its strategic divestment of their Electrical & Automation (L&T E&A) business to Schneider Electric, a global player in energy management and automation. On Tuesday, L&T stock gained by over 2% with an intraday high of Rs965.95 per piece on Sensex in the early deal.
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. The challenge was to carve out a business of this scale, with minimum disruption to the sprawling customer base and do it all amid the constraints of a pandemic. We believe Schneider Electric is the right partner to grow the business, that L&T had nurtured and grown over decades. We truly believe that this deal with Schneider Electric is a win-win for our employees, business partners, and shareholders.”
The divestment was announced in May 2018 and is in line with L&T’s stated goal of unlocking value for future growth.
Under L&T’s E&A business includes a wide range of low and medium voltage switchgear, electrical systems, industrial and building automation solutions, energy management systems, metering solutions and projects and services which are transferred to Schneider.
Furthermore, about 5,000 employees of the E&A business will become part of Schneider Electric’s global family.
Also, as part of the deal includes 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.
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.”
However, L&T still requires local approval for its subsidiary L&T Electrical & Automation Saudi Arabia Company Limited (LTEASA), which is pending currently. Once approval is in place, the subsidiary will be transferred to Schneider.
L&T in its regulatory approval adds, “Recent divestment of its stake in ports, insurance, road concessions and other businesses have all unlocked value and this deal with Schneider Electric will further strengthen the balance sheet.”
At around 10.15 am, L&T stock was performing at Rs957.90 per piece higher by 1.33%.
