Schneider Electric Agrees to Purchase Invensys

July 31, 2013
After negotiations with other potential buyers failed to progress, Invensys is now set to be officially acquired by Schneider Electric.

Major industrial automation merger and acquisition deals have been a bit quiet since ABB’s deals over the past two years with Thomas & Betts and Baldor and Siemens' recent acquisition of Invensys’ rail business. Now comes news that Schneider Electric has agreed to buy Invensys for 3.4 billion pounds ($5.2 billion).

Official word from the two companies, at this point, is just that — officially approved statements suitable for press releases. Little insight has yet been given as to what this might mean in the near term for current Invensys customers.

In a reply to a request for comment on how this deal will impact existing Invensys customers, Steve Devany, head of corporate communications for Invensys, said: “In terms of customers, there should be no effects in the short term.  The deal has to go through several approvals during the next few months and is unlikely to complete until the end of the calendar year. In the meantime, it is very much business as usual. On the personnel front, it is too early to comment upon specific roles, but Schneider have said consistently during negotiations that one of the main attractions of Invensys is the quality of our people.”

Since the deal is not set to close until the end of 2013, it will likely be well into 2014 before we know more details about how the acquisition will be handled in detail with regard to any impact on customer support and availability of products. The only intent being made official in these early stages is that Invensys’ appliance unit, which manufacturers controls for washing machines, could be sold, according to a report by Reuters quoting Schneider Chief Financial Officer Emmanuel Babeau.

According to Reuters, Schneider's deal with Invensys is the company’s biggest since it acquired American Power Conversion Corp. in 2006 for $6.1 billion. The Invensys acquisition is poised to extend Schneider's automation products for the automotive, aerospace, and food and beverage industries with Invensys' automation software and hardware for power stations, oil refineries and chemical plants.

Most reports are noting that, by adding on Invensys’s hardware and software offerings for the process industries, Schneider is better positioned to compete globally with other large global automation players such as ABB and Siemens.

The Wall Street Journal provided some interesting insight through its observation that, in recent years, Schneider has been making more of a “push into the business of providing industrial sites with bundled offerings of electrical and industrial equipment, software and services, instead of selling low-voltage devices, its historical business. The company is especially keen in developing in emerging markets such as China. Schneider Electric Chief Executive Jean-Pascal Tricoire is based in Hong Kong.”

The video below from the Financial Times explores why this deal makes good business sense for Schneider in terms of expanding its automation offering.

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