GE and ABB … Done Deal

The post, GE and ABB – A Done Deal Yet? Almost, was written Sunday night before my early morning departure to head to the AD North American Meeting.  Now we have confirmation of a deal … ABB has purchased GE Industrial for $2.6 billion.

ABB, in its press release, lauds these benefits:

• Acquisition will strengthen ABB’s #2 global position in electrification
• Non-core GE business with significant value creation potential within ABB
• Expands ABB’s access to the North American market through deep customer relationships, large installed base and extensive distribution networks
• Long-term usage of GE brand agreed
• Purchase price of $2.6 billion
• Potential for annual cost synergies of approximately $200 million
• ABB and GE establish long-term, strategic supply relationship for ABB products
• Operational EPS accretive in year one

Additionally, we’ve read that they expect $200 million in “synergies”, which is to be expected, and that there are “long term supply agreements.”

• While some have said that ABB may have overpaid somewhat, consider:
• What’s a few million among friends, especially for large companies?
• The “incremental spend” is more than made up in the time and cost savings of creating a more complete line and then resourcing it with people.  Now ABB needs to enhance versus build from scratch.
• The $2.6 billion saves GE “face”.  The deal is already being credited to the new leadership of Flannery. (Immelt who?)

The deal is to close in the first half of 2018.  The work now begins.

Since we know that leaders in both companies have access to, and sometimes read, ElectricalTrends, share your thoughts on the potential of the deal and what should / needs to get done … structure, employees, closings, line divestitures, channel, marketing, sales organization, etc…