MUMBAI • India's Larsen & Toubro has agreed to sell its electrical and automation business for 140 billion rupees (S$2.8 billion) to Schneider Electric SE, partnering with Temasek, in the biggest merger and acquisition deal announced in the Indian market this year.

Schneider Electric will combine the business it is buying with its low voltage and industrial automation products business in India, it said.

Schneider will own 65 per cent in the combined business, while Singapore investment firm Temasek will have a 35 per cent stake.

The cash deal is part of L&T's plan to sell its non-core business at a time when India's biggest engineering group has seen slower growth in orders amid a prolonged economic downturn.

The sale matches L&T's stated intent of unlocking value within the existing business portfolio.

Said Mr Rohit Sipahimalani, joint head of India at Temasek: "Our investment in Schneider Electric India is another step in the steady growth of our portfolio in India over the past few years, and reflective of the type of partnership opportunities that we seek to invest into.

"India's favourable demographics, as well as its growing middle-income population and consumption trends, all represent opportunities for us to further invest in India's growing companies.

"We remain confident in the long-term prospects of India's economy, and look forward to more of such investment opportunities in the country."

The deal includes all segments of its electrical and automation business except marine switchgear and servowatch systems, L&T said.

REUTERS