ABB Acquisition of GE Industrial Solutions: Why The Business Will Still Be Called GE

Author photo: Craig Resnick
ByCraig Resnick
Category:
Industry Trends

This week ABB announced the acquisition of GE Industrial Solutions electrification solutions business for $2.6 billion. GE Industrial Solutions has customers in over 100 countries and an established installed base with strong roots in North America. In 2016, GE Industrial Solutions had revenues of approximately $2.7 billion, GE Industrial Solutions will be integrated into ABB’s Electrification Products (EP) division, and will result in ABB’s technologies and the ABB Ability digital offering coupled with GE Industrial Solutions’ complementary solutions and market access. ABB will retain GE Industrial Solutions management team and build upon its sales force, but why is ABB keeping the GE brand name long-term, which happens to be ABB’s biggest market?

ABB Acquisition of GE Industrial Means More Electrical Products

Key GE Industrial Products Include Motor Control Centers and Switchgear
(Source: GE Industrial)

ARC's Perspective on the Acquisition

From ARC’s perspective, this deal is a win-win situation. ABB wants to expand its access to North America, and the GE name, a fixture in North America since 1892, will make it easier to transition the extensive installed base than changing the name to the less familiar ABB. There will also be extensive cost synergies that will make the combined business significantly more profitable, which is one of the reasons that new GE CEO John Flannery sold this business as his first major deal since taking over from Jeff Immelt on August 1st. GE had planned to sell the business while Jeff Immelt was CEO, since it was non-core to GE’s transition to a digital industrial company.

Besides keeping the brand, ABB will leverage the GE infrastructure, including the 13,500 employees making up 29 manufacturing facilities, 15 distribution centers, 13 service centers, and 9 R&D centers. There are over 1,000 US distributors alone, which ABB can now access for additional low voltage solutions as well. Customers will appreciate the continuity of the product and people, helping to ensure a smooth transition from a company in which the business was not core, to a company in which the business is core.

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