Schneider Electric in talks to buy UK's Invensys for around $5 bn

French energy management company Schneider Electric yesterday said it was in early talks to buy Invensys Plc in a deal that values the British engineering, home appliances and software group at about £3.3 billion ($5 billion).

Schneider said that it believes that the strategic and financial rationale for this transaction, if consummated, is compelling and the acquisition would increase its focus on the attractive industry automation sector.

''The enlarged group would significantly expand its access to key electro-intensive segments where Schneider Electric offers leading low and medium voltage as well as energy management solutions. It would also gain a leading position in the fast growing software business for industrial operational efficiency,'' Schneider said in a statement.

Based in the western suburbs of Paris, Schneider is proposing to pay 319 pence in cash and 186 pence in new Schneider shares - a total of 505 pence, representing a 15- per cent premium to Invensys yesterday close on the London Stock Exchange.

Analysts have earlier said that Invensys could be a potential takeover target after it sold its rail unit to Siemens for £1.74 billion. (See: Siemens to acquire rail automation unit of Invensys for $2.78 bn)

Invensy, whose business includes industrial automation systems, has since last year been in talks with potential suitors, including Siemens and General Electric to sell itself either completely or partially.

Last July, the London-based company said that it has ended takeover talks with US industrial giant Emerson Electric and other potential suitors, without an offer being made.

Invensy did not reveal why Emerson had backed off from making an offer, but potential suitors may have been deterred by Invensys's then £426-million pension scheme deficit.

Formed through the 1999 merger  between BTR plc and Siebe plc, Invensy makes control systems for nuclear power stations, industry, railways and domestic appliances.

Active in over 180 countries, Invensy employs more than 16,500 people across four business segments - software, industrial automation, energy controls and appliance.

The company has a market cap of $3.3 billion and generated net profit of $188 million in 2012 on revenues of $2.7 billion.

Schneider Electric, which made acquisitions worth $3.8 billion in 2011 and 2012, including Indian power-storage systems maker APW President Systems, was founded in 1836 by two brothers, Eugène I and Adolphe Schneider, who began by manufacturing electric motors and locomotives.

Today, it has become a global leader in power and control solutions mainly through the over 18 strategic acquisitions it has made since the past 135 years.

The company is a specialist in integrated solutions across multiple market segments that include energy and infrastructure, industrial processes, building automation, and data centres/networks, as well as a broad presence in residential applications.

Schneider, which has a market cap of $31 billion, reported sales of $31.1 billion in 2012.

Schneider has until 8 August to make a firm offer for Invensys under UK takeover rules.

Schneider Electric
2012 (31 Dec)
$31.1 billion
$29.1 billion
Operating Income
$7.51 billion
$7 billion
Net Income
$2.4 billion
Share Price (As on 11.07.13)
Outstanding Shares
555.4 million
Market Cap
$31 billion
Invensys Plc
2013 (31 March)
$2.7 billion
$2.6 billion
$3.75 billion
Operating Income
$169 million
$134 million
$374 million
Net Income
$188 million
$148 million
$262 million
Share Price (As on 11.07.13)
Outstanding Shares
652.6 million
Market Cap
$3.3 billion