The acquisition bender at Schneider Electric, Rueil-Malmaison, France, continued this month. The electrical manufacturer offered to lay down a huge chunk of money for a broader play in the software side of smart-grid development with a $2 billion deal to buy Telvent GIT, SA, based in Madrid, Spain.
Telvent has established itself as a major player in software for real-time management of mission-critical infrastructure in the electricity, oil and gas, water and transportation sectors. The consensus among analysts seems to be that Telvent’s position in providing software to manage utility power distribution networks was Schneider’s primary interest.
The deal commits Schneider to pay $40 per share for all public shares of the company, a 36 percent premium over Telvent’s three-month trailing average share price. Schneider has the approval of Telvent’s board and expects to close the transaction in the third quarter. Engineering and environmental firm Abengoa SA, Seville, Spain, which owns a 40 percent stake in Telvent, has signed an irrevocable agreement to tender its stake.
In a press release announcing Telvent’s approval of the offer, Chairman and CEO Ignacio González Domínguez, pointed to opportunities for expansion brought by a union with Schneider. “We see strong complementarities of Telvent’s solution offering and that of Schneider Electric, as well as a good cultural fit of people and spirit,” he said. “We believe that our customers will benefit highly from this combination. With Schneider Electric, Telvent expects to expand its global footprint, especially in the fast growing new economies. We look forward to this next phase of the development of our company.”
Schneider’s release highlights several advantages to justify the $2 billion outlay. “By acquiring Telvent, Schneider Electric will integrate a high value-added software platform that presents a good fit with its own range in field device control and operation management software for the smart grid and efficient infrastructures. (Schneider) will also double its overall software development competencies and enhance its IT integration and software service capability, including weather services.”
Specifically, the addition of Telvent will allow Schneider to offer electrical utility customers a complete substation automation and smart grid software suite comprising DMS (distribution management system), OMS (outage management system), SCADA (supervisory control and data acquisition), MDM (meter data management) and GIS (geographical information system).
Schneider also pointed to the two companies’ complementary geographic reach, including Telvent’s strong position in North America and Latin America.
Telvent employs more than 6,000 people worldwide and operates in more than 19 countries. It reported 2010 sales of approximately €753 million (about $1.07 billion at today’s rates) and adjusted EBITDA of €115 million ($162 million). Its key markets are in Europe (42% of 2010 sales), North America (35%) and Latin America (16%).