UPDATE: Eaton Has Emerged As Highest Bidder For Larsen's Business

Industrial conglomerate Eaton Corp. (ETN) has emerged as the highest bidder for the electrical and automation products division of Larsen & Toubro Ltd. (500510.BY), the funds from which will go towards expanding its business of building large industrial projects, said a person familiar with the matter.

"Larsen expects about INR125 billion-INR140 billion for the business," the person, who didn't wish to be identified, told Dow Jones Newswires Wednesday.

"[Larsen's] priority is to sell the business," he said.

Apart from the U.S.-based company, Schneider Electric SA (SU.FR) is also interested in buying the business and both companies are conducting due diligence separately, he added.

Spokespersons for both Eaton and Schneider said they don't comment on speculation.

Eaton and Schneider are keen to expand their presence in India due to rising demand for industrial products as manufacturing becomes more sophisticated in the world's second-fastest growing economy where newer factories for everything from cement to cars are coming up.

Eaton earlier in April said it aims to lift annual revenue from India threefold to $500 million by 2015.

Larsen, on the other hand, has a priority to shift away from the products business given its hands are full of large-scale projects, such as buildings power plants and airports, with infrastructure spending lifting off in India in a big way.

India's federal government estimates $1 trillion spending in the 2012-17 period to update the South Asian nation's creaking roads, ports, highways and power plants.

Larsen Tuesday said its board will seek shareholders' permission to transfer the company's electrical and automation business to a subsidiary.

At a meeting held on April 6, the board of India's largest engineering company by sales approved the "transfer [of the business] to a subsidiary or associate company or to any other entity." But the company hasn't yet made any official comment yet on its plans to sell off the business.

The source said a deal to sell off Larsen's electrical and automation business may be soon announced.

-By Kenan Machado, Dow Jones Newswires; 91-11-4356-3358; prasenjit.bhattacharya@dowjones.com

Eaton (NYSE:ETN)
Historical Stock Chart
From May 2024 to Jun 2024