In its biggest divestment so far, engineering conglomerate Larsen & Toubro (L&T) on Tuesday said it would sell its electrical and automation business (E&A) to France-headquartered Schneider Electric for a cash consideration of Rs 140 billion, reported Business Standard.
The deal is important because it signals L&T’s exit from manufacturing in the real sense, a source said to BS. Although it will continue with manufacturing in power equipment as well as industrial products and machinery, that will primarily be on the project business side with associated fabrication, the source added.
Schneider Electric will partner investment company Temasek for the deal, which took merchant bankers to several cities within India and overseas.
On Tuesday L&T signed, subject to regulatory approvals, definitive agreements with Schneider Electric, for strategic divestment of its E&A business for an all-cash consideration of Rs 140 billion, the company said in a statement.
The divestment of this business is part of L&T’s larger plan to streamline its operations by divesting from non-core assets. The contribution from the E&A division to L&T’s total revenue has declined over the years as the proportion of other segments such as infrastructure and engineering, procurement, and construction grew. In addition, the E&A industry, which requires constant technology advancements, also grew competitive, said an analyst.
