By Fortune Editors and Reuters
September 25, 2017

Under pressure from activist investors to pep up its share price, General Electric (ge) is offloading its unloved Industrial Solutions business to European rival ABB (abb) for $2.6 billion.

Zurich-based ABB is betting on improving the division’s lackluster margins over the next five years. It said the deal includes an agreement for long-term use of GE’s brand and a strategic partnership. In 2016, the GE business had sales of $2.7 billion.

The GE products include circuit breakers, switchgear, components for lighting control and power supply equipment for facilities including data centers. ABB’s portfolio includes similar products.

Read: New GE Chief Confirms Narrower Focus for Industrial Cloud

ABB is seeking better access to the North American market and greater access to GE’s larger base of electrical installations worldwide. It pledged to upgrade aging products with its own technology to help arrest a declining U.S. market share.

ABB is suspending its $3 billion share buyback program as part of the deal, which will bolster its position as the second-biggest supplier of electrical components behind France’s Schneider Electric. But the stock market still like the deal, pushing up its shares 0.6% on the perception that it had got a bargain. GE had cut its price demands after ABB refused to pay the price it initially demanded, Reuters had reported in August.

“The key rationale of the integration is, first we will make this business better. And then afterwards, we will make this business bigger and better,” said ABB Chief Executive Ulrich Spiesshofer. Spiesshofer said he agreed to the transaction only after striking a supply partnership where ABB and GE will increase buying and selling from each another.

Some still weren’t convinced. The GE unit’s operating earnings are just 6 percent of sales, less than half the 15 percent operating margin at ABB’s comparable Electrification Products division.

Read: GE’s New CEO Is Preparing an “Aggressive” Round of Job Cuts

“GE Industrial Solutions isn’t in top shape, so ABB has its work cut out for it,” said Zuercher Kantonalbank analyst Richard Frei.

ABB expects integration potential for annual cost benefits of $200 million, after initial integration costs of $400 million.

GE has been under pressure from activist investor Nelson Peltz’s Trian Fund Management to sell assets and focus on higher-margin businesses.

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