GE and ABB … Doing the Tango?

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TangoAccording to a Reuters report, GE and ABB  have reportedly “resumed negotiations” to sell GE Industrial to ABB.

The article further references that Schneider Electric has decided to drop out of the race.

So, it begs some thoughts:

  • If there is “resumed” negotiations, that infers that there were negotiations that had broken off at a point in time.
  • Back in late April it was reported that at least three private equity firms had expressed interest. Is it possible that through their due diligence they decided not to bid? Or did their due diligence make them decide not to offer too much for the business / significantly below GE’s desired selling price?
  • It’s not surprising that Schneider decided not to pursue. Many felt that Schneider wanted to play a “spoiler” role to increase the price for ABB (or possibly a private equity firm) and then wanted to sell off pieces of the company.  While they may have been able to make the acquisition, they would have incurred incremental expenses in selling off pieces (presuming they found buyers.) Perhaps they found better venues for investing their monies.
  • ABB knows many GE customers well, especially those in the electrical distribution space due to Thomas & Betts / ABB Electrification Products’ alignment with GE distributors. A tighter relationship, theoretically but down the line, could help T&B construction products as well as industrial products, depending upon the distributor’s focus. The historical Rockwell concern about ABB being involved with a Rockwell distributor, from talking to distributors, is unwarranted as no Rockwell distributor that is committed to the industrial space would replace Rockwell with ABB in their APR (area of primary responsibility) but it could be a good complement (assuming other issues are addressed) for a distributor’s non-APR locations.
  • The delay in the sale, which was launched the first of the year, has surprised many and, according to some inside GE, who have posted thoughts on this April 23rd ElectricalTrends posting, is affecting employee morale and perhaps some production / delivery / support.  Perhaps distributors can share other observations?
  • The sale price, according to some insiders who posted on the blog, could be $2.3B or possibly less than $2B.  GE is focused on getting this sold and it may be better for them to sell now versus delay further. (And once they get this sold, wonder how long before GE Lighting (lamps) gets sold as there hasn’t been much talk about it.)
    • And given the comments some have posted (and we have not solicited any nor moderated any), it appears that there are “challenges” in the field.  If ABB acquires GE Industrial, it sounds like a personnel plan will quickly be needed, an employee motivation strategy developed and investments made into the business.
ABB & GEDistributors … 
  • Do you think this would be a good move for GE?
  • Is this a good move for ABB? Why?
  • How could this help Thomas & Betts / ABB Electrification Products?
  • Should it continue to be run as a separate division? Would changing the name from GE to ABB help the business, hurt the business or have no impact?
  • Do you think this is a better alternative than a private equity owner for the channel and customers / contractors? For employees?
  • What, if any, benefit could this have for you if you are a construction-oriented distributor?
  • Does this have any impact for industrially-oriented distributors?
  • What, if any, impact could this have on Schneider, Eaton or Siemens? Or is this a way for ABB to quickly gain some share in the market, in these product categories, and then over time seek to grow the business?
  • If you were ABB and bought the company, and are a GE distributor what would you want them to do “quickly”? Within 3 years?

Thoughts?

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