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L&T Completes Disinvestment of Electrical and Automation Business at Schneider Electric

Udaipur : Larsen & Toubro (L&T), India’s leading engineering, technology,construction and financial services conglomerate, today announced the closure ofthe strategic divestment of its Electrical & Automation (L&T E&A) business to Schneider Electric, a global player in energy management and automation.

Thesignificant and complex divestment deal, oneof its kind in India announced in May 2018 hasbeencompleted after receivingthe requisite regulatory approvals and fulfilment of necessary conditions. The divestment is in line with L&T’s stated goal of unlocking value for future growth.L&T continuously evaluates its business portfolio and takes capital allocation decisions from a long-term perspective. Its exit from the Electrical & Automation Business is a part of the strategic portfolio review process.

Commenting on the closure of this divestment,Mr. 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 overdecades. We truly believe that this deal with Schneider Electric is a win-win for our employees, business partners, and shareholders.”

Mr. 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 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.”

L&T’s E&A business with its wide range of low and medium voltage switchgear, electrical systems, industrial and building automation solutions, energy management systems, metering solutionsand projects and services business are transferred to Schneider Electric.Schneider Electricwill use related brand insigniafor a specified period as the brand is very popular and has a strong brand recall in the switchgear market.

About 5,000 employees of the E&A business will become part of Schneider Electric’s globalfamily.The manufacturing facilities of E&A in Navi Mumbai, Ahmednagar, Vadodara, Coimbatore and Mysuru in India and related subsidiaries in UAE, Kuwait, Malaysia and Indonesiaare also beingtransferred to Schneider Electric.In view of the pending local approvals, the subsidiary in Saudi Arabia, L&T Electrical & Automation Saudi Arabia Company Limited (LTEASA), will be transferred to Schneider,once the requisite regulatory approvals are in place.

L&T, over the past five years, in line with its strategy to focus on the EPC and Services business,hasexited several businesses. The recent divestmentof 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. Shardul Amarchand Mangaldas (SAM)Legal Advisors, Ernst & Young (EY) LLPand Arpwood Capitalacted as advisors to L&T on this transaction.

 

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