General Electric Co. and ABB Ltd. Do Business: What it Means to Investors
The agreement by ABB Ltd. (NYSE: ABB) to buy the industrial solutions business of General Electric Co. (NYSE: GE) sheds new light onto the strategic plans of both companies, and arguably makes them more investable. Let's take a look at the deal and what it means for investors in both stocks.
The rationale behind the deal for the buyer is that it gives ABB an underperforming and underinvested business that it can use to expand its margins and strengthen its global position in electrification. Meanwhile, GE sheds an underperforming non-core business, and gains $2.6 billion it can potentially use to accelerate its restructuring or make acquisitions.
An uninterruptible power supply used in a data center. Image source: ABB Ltd
Source: Fool.com