Schneider Electric in talks to acquire Invensys

Proposed $5 billion deal could position company against rivals in industrial, building, and data center markets

07/12/2013


Schneider Electric is in talks to acquire Invensys for a reported $5 billion. The deal, if successful, would enhance Schneider's position in the industrial, building, and data center markets. Courtesy: Schneider ElectricAn industry analyst said July 12 that the proposed acquisition of Invensys by Schneider Electric would create a more powerful industrial automation company while enhancing Schneider Electric’s position in the commercial and residential building automation markets.

Frost & Sullivan Industry Manager Konkana Khaund said the acquisition, reported to be a $5 billion deal, "Could lead to some significant implication on competitive strategy maximization and diversification for Schneider Electric. The immediate industry focus is high on evaluating the outcome on the industrial business of Schneider Electric, which would be the prime beneficiary from such an acquisition, given Invensys’ core competencies in this area. But it is hard to ignore the imminent implications this could have on Schneider Electric’s buildings, residential and data center businesses.”

Invensys is based in London, so the early discussions have centered on how U.K regulators might view the proposed deal. Bloomberg.com reported that Emerson, the St. Louis-based technology company which had previously pondered a deal for Invensys, also may look to make a counter-offer.

Officials of Paris-based Schneider Electric confirmed their interest in Invensys in a press release issued July 7, saying it is “in the early stages of discussions with the Board of Directors of Invensys.

“Schneider Electric believes that the strategic and financial rationale for this transaction, if consummated, is compelling,” company officials said in the release. “Schneider Electric is considering making an offer for Invensys in order to 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 Electric takes a disciplined approach to acquisitions with clearly defined strategic and financial criteria,” the company went on to say.

That matches with the company’s current strengths, noted Khaund, from F&S. “The buildings and residential energy management business lines are expected to gain further impetus from the company strategic repositioning efforts to be recognized as a global leader in energy management, security, high performance buildings, smart homes and smart cities,” Khaund said.

Another benefit for Schneider Electric could be its emergence in the expanding data center market, driven by the rush toward cloud computing. “The combined portfolio will eventually be optimized by Schneider Electric to potentially strengthen its offering in the datacenter business, particularly software solutions geared towards infrastructure and building operation level supervision, control and monitoring,” Khaund said. “The company’s underlying interest in lighting and energy/temperature controls, an area that has been in focus through targeted acquisitions, but not fully maximized to its potential, could be a major winner. The market share line-up of this segment that Schneider Electric has conspicuously remained out of, but one that is fiercely dominated by some of the company’s major competitors, could witness some healthy competitive reorganization.”

Speculation about the proposed acquisition of Invensys has centered on Schneider Electric’s desire to position itself against larger industry rivals. The Wall Street Journal mentioned Siemens, Rockwell Automation, and Mitsubishi Electric among the key rivals in this space.

Other major automation companies not mentioned here include ABB, Eaton, Honeywell, and Yokogawa, among others. 

 

- Bob Vavra, CFE Media, Plant Engineering, Control Engineering, Consulting-Specifying Engineer.



ESMOND , Non-US/Not Applicable, Singapore, 07/17/13 02:28 AM:

I believe this acquisition will put Schneider in a better market position vs Rockwell and Siemens, as Schneider doesn't has a strong HMI product and the manufacturing solution e.g MES comparing with the others two organizations. Additional benefit for Schneider is the F&B industry. Wonderware has the largest market shares compare to the other players. Giving to the high-end solution, DCS and safety product will gives Schneider a stronger power to competing with players like ABB, Honeywell, Emerson and Yokogawa.