Schneider Electric Offers $5 Billion for Invensys

Schneider Electric Offers $5 Billion for Invensys

Takeover battle possible Multiple brands, lines of business

Invensys plc confirmed it has received a takeover offer from Schneider Electric, a bid estimated at $5 billion. The proposed acquisition may revive interest from other suitors of Invensys, which may include Emerson Electric, which entered negotiations with Invensys in 2012. Other developers of automation and control engineering systems may be interested, too.

Analysts suggest the proposal could initiate a takeover battle because of the increasing significance of automation in manufacturing, including “smart management” technologies. The influence of energy costs and regulatory standards also suggest new importance for automation technologies and control systems and devices.

Invensys plc is a multinational engineering and IT company headquartered in London, with operations in over 50 countries. It’s organized as four business groups: Software, Industrial Automation, Energy Controls and Appliance. And, it holds a number of important brands, including Avantis, Drayton, Eberle, Eliwell, Eurotherm, Foxboro, IMServ, Triconex, and Wonderware.

More than half of the Invensys portfolio is contained in its Industrial Automation business segment, according to an analysis by IHS Inc. This includes measurement and instrumentation products, but it consists primarily of control products, including distributed control systems (DCS) and process safety systems. It’s notable too that Invensys is a fixture in the power, oil, gas and refining sectors, according to IHS.

Schneider Electric SA is a multinational, too, based in France and operating globally. Its businesses specialize in electricity distribution, automation management, and energy management.

Buying Invensys would enhance Schneider’s industrial automation and software product lines, giving it a more competitive standing versus larger automation system developers, like General Electric or Siemens.

Besides being a supplier of process safety systems, Invensys held 6.5 percent of the global DCS market in 2012, a position that IHS estimated at $16.8 billion. Buying IHS would boost Schneider Electric into the sixth spot in the global DCS market and enhance the value of its automation products (including distribution products) for oil-and-gas, refining, and petrochemical markets.

“IOM long has been viewed as a potential takeover target, with Emerson calling off initial talks regarding an acquisition in the first half of 2012,” recalled Alex West, associate director - Process, Machinery & Instrumentation for IHS Inc. “However, other industrial automation giants, including European firms ABB and Siemens, as well as the U.S.-based General Electric, also have all reportedly made preliminary contact previously,” West wrote. “With its offer, Schneider Electric has taken control of what could break out into a full-scale bidding war for IOM.”

“Schneider Electric believes that the strategic and financial rationale for this transaction, if consummated, is compelling,” according to a statement by the multinational. It said its offer for Invensys would increase its focus on the “attractive” industrial 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,” the statement continued. “It would also gain a leading position in the fast-growing software business for industrial operational efficiency.”

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