L&T Completes Divestment of its Electrical & Automation Business to Schneider Electric for Rs 14,000 crore
Larsen & Toubro (L&T) on Monday announced the closure of the strategic divestment of its Electrical & Automation (L&T E&A) business to Schneider Electric.
Larsen & Toubro (L&T) on Monday announced the closure of the strategic divestment of its Electrical & Automation (L&T E&A) business to Schneider Electric. This strategic divestment is in line with L&T's stated goal of unlocking value for future growth.
It is a Rs 14,000 crore in an all-cash deal and the company said that it will use the proceeds to capital allocation decisions from a long-term perspective.
L&T is India's leading engineering, technology, construction and financial services conglomerate. Schneider Electric is a global player in energy management and automation.
This significant and complex divestment deal was announced in May 2018 and has been completed after receiving the requisite regulatory approvals and fulfilment of necessary conditions.
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.
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 over the decades. 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 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."
Over the past five years, L&T in line with its strategy to focus on the EPC and Services business and has exited several businesses. The 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.
Shardul Amarchand Mangaldas (SAM) Legal Advisors, Ernst & Young (EY) LLP and Arpwood Capital acted as advisors to L&T on this transaction.