Update: Schneider formalizes offer for Invensys

Schneider Electric, Rueil-Malmaison, France, issued a press release saying that it has reached "an agreement on the terms of a recommended offer by Schneider Electric to acquire the entire issued and to be issued share capital of Invensys plc", London, U.K. As Electrical Marketing reported last week, Schneider previously had made informal overtures to Invensys, inviting widespread speculation that rival companies would offer competing bids. Thus far, none has stepped forward.

Schneider's formal bid totalling £3.4 billion (US$5.2 billion) is priced at £5.02 per Invensys share, which is a premium of 14% on over the last closing price prior to announcement of discussions and a 27% premium over the last 3-month VWAP (volume-weighted average price) prior to announcement of discussions.

“Schneider Electric believes the businesses of Schneider Electric and Invensys to be highly complementary to respond to these business trends, with the combination representing a unique opportunity to create a global leader in industrial automation, advanced software solutions and power solutions. This will enable the enlarged group to offer a broader range of systems and services to new and existing clients.”

“Industrial automation is a highly attractive market, characterised by solid growth trends together with a large and scattered customer base and high premium attached to experience and an installed base,” said the Schneider release. “Invensys’ Industrial Automation business is one of the leaders in the provision of process control and safety solutions to some of the world’s largest and most complex industrial plants through its Foxboro (control systems) and Triconex (safety system) brands. Invensys has the third largest base of installed distributed control systems (“DCS”) in the industry, securing recurring revenues from a loyal customer base, but more importantly providing an opportunity to address the larger needs of those customers. Invensys’ safety systems are recognized [sic] as one of the market leaders and a critical component of an integrated solution.”

Schneider further pointed out Invensys’ role in providing automation solutions to electro-intensive industries, deriving 61% of its revenue from these end-markets in fiscal year 2013.

As at the end of FY2013, Invensys’ customer portfolio included:

·         23 of the top 25 oil and gas companies

·         48 of the top 50 chemicals companies

·         18 of the top 20 pharmaceuticals companies

·         All of the top 10 mining companies

·         21 of the top 25 food and beverage companies

“The acquisition of Invensys will significantly strengthen Schneider Electric’s position in these end-markets and will complement its existing PlantStruxure PES offering, its software application offering, and its significant power distribution presence with those customers," Schneider said. "Invensys’ presence in segments driven by process automation is therefore very complementary to Schneider Electric’s Industry business’ historical presence in segments driven by discrete and hybrid automation. The enlarged group will enjoy optimal coverage of all key industry segments and drive pull-through across their customer bases.”

More: Schneider Electric press release, "Schneider Electric to reinforce its position inindustrial automation and electro-intensive segments through the acquisition of Invensys plc"