India's Larsen 'seeks to sell unit for $3 bln'
India's biggest engineering company Larsen and Toubro is in talks with international firms to sell its electronics arm in a deal expected to be worth nearly $3 billion, reports said Saturday.
The company is in discussions with top French energy management company Schneider Electric and US diversified power management firm Eaton to sell the unit which makes switches, circuit breakers and other goods, the reports said.
Larsen would not comment on the reports in Indian media, which quoted unnamed sources.
The electronics business has annual sales of 37 billion rupees ($836 million) and contributes seven percent to Larsen's turnover.
The Indian company is looking to obtain a price around three times annual revenues, the Business Standard reported. Investment bankers were quoted as saying the unit could fetch around 115 billion rupees ($2.6 billion).
The reports said Larsen planned to sell its electronics arm because it wanted to focus more on engineering projects rather than making products in the face of stiff competition in the electronics segment.
"This division is lagging in business for Larsen and the company is now focusing on core businesses," an analyst was quoted as saying. "Larsen is the leader in switchgears and hence the deal could command a premium."
In March, Larsen sold its stake in an earth-moving and mining manufacturing company.
For both Schneider and Eaton, the acquisition could offer an opportunity for faster growth, analysts said. The two companies are already present in India and expanding rapidly.
Larsen announced earlier in the year plans to reorganise its businesses to streamline operations.
© 2011 AFP