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(Bloomberg) -- General Electric Co. is nearing an agreement to sell its industrial-solutions business to ABB Ltd. in a deal valued at $2.5 billion to $3 billion, people with knowledge of the matter said.
The American and Swiss companies are likely to announce an agreement by next week, said the people, who asked not to be identified because talks are private. ABB doesn’t comment on rumors and speculation, a spokesman said. A representative of GE didn’t immediately reply to a request for comment.
The decision caps a months-long bidding process after GE put the electrical-products unit up for sale in December. The two companies have been finalizing contractual agreements for the supply and services of future equipment, the people said, and talks could still be delayed or fall apart.
Jeffrey Immelt, who stepped down over the summer as GE’s chief executive officer, tilted the Boston-based company toward high-margin equipment manufacturing in recent years by jettisoning the bulk of its finance arm and some consumer operations.
John Flannery, who handled mergers and acquisitions for GE in 2013 and 2014 and took over as CEO Aug. 1, will look to strengthen operations and boost a lagging stock price as shareholder Trian Fund Management pressures management to improve performance. GE agreed in March to deepen its cost-cut targets after consulting with Trian, an activist investment firm co-founded by Nelson Peltz.
Industrial solutions, one of GE’s smaller and less glamorous divisions, sells electrical-distribution products such as circuit breakers and switchgear. The business has about 13,500 employees, according to its website. GE has said it would use proceeds from the sale of industrial solutions and a separate water unit to fund restructuring.
The deal comes after ABB bought an Austrian industrial-software company for about $2 billion to bolster its automation business. Zurich-based ABB, the world’s largest supplier of power grids, has faced calls from activist Cevian Capital AB to strengthen its portfolio.Following the automation deal, ABB CEO Ulrich Spiesshofer told reporters that the company would continue to look at acquisitions, which he called “one of the drivers of growth going forward.”
--With assistance from Tara Patel
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