Study of effectiveness of various merger motives and consolidation on the growth of the electrical equipment industry

Abstract

Firms in the electrical equipment industry manufacture equipment used in generation, transmission, distribution, or consumption of electric power. These equipment include transformers; electric motors, generators, and motor generator sets; switchgear and switchboard apparatus; relays; contactors; timers; fuses; energy meters and industrial controls. The electrical equipment industry has evolved over the past 150 years. The technology in this industry is relatively stable and does not change as rapidly as in the electronics industry. There has been no evidence of a breakthrough technology in the past few decades which has shaken up the entire industry. However, the electrical equipment industry is steadily and gradually converging with the electronics industry, with a lot of intelligence being built in these devices making them more feature-friendly and compact. There has been a history of Mergers and Acquisitions in the industry. The late 1980s saw a surge in acquisition activity from global majors like ABB, Schneider Electric, GE and Siemens. The global players have been extremely active during the 5th and 6th merger waves. Schneider Electric has emerged from near bankruptcy to become a leading player in the global industry through extremely well-thought acquisitions. Eaton Electric and Cooper Industries, both US based, are making rapid inroads through acquisitions. Eaton, in particular, has made a couple of big-ticket acquisitions in Europe to expand its geographical footprint. Siemens has been growing through a combination of organic means and selective acquisitions. General Electric, once a very aggressive acquirer, is probably facing the heat and has slowed down its inorganic growth. Areva TandD has become a global player on account of its big-ticket acquisition of Alstom s TandD business. ABB, an aggressive acquirer in the late-1980s, has just recovered from near bankruptcy, due to its asbestos liability which stemmed from one of its acquisitions.