I decided to probe the depths of the Invensys Website this morning and found the following announcement that the boards of Schneider Electric and Invensys have reached agreement in which Schneider (or a wholly-owned subsidiary) will acquire all the shares of Invensys.
This is no doubt a mixture of good news and bad news for Invensys employees, business and the industry.
On the one hand, Schneider is much more stable at the top than Invensys. Not to mention financially stable. Invensys top management has been unstable, not focused, and obviously not really concerned with running a viable business.
On the other hand, Schneider’s direction over the past few years has been focused on energy–primarily electrical distribution and power quality. Its sole large venture into industrial automation software–the Citect acquisition–has not been managed for growth. Indeed, I seldom hear anything about that business. And that is mostly when I run into an old contact at a conference.
In like manner, Schneider has pretty much ruined a great old brand in Modicon. And, once again, news from the automation side of the business has been sparse for several years.
It will be interesting to see how Schneider integrates the many unfamiliar businesses–Foxboro/Triconex and Wonderware/Skelta. I, of course, hope for the best. If it leaves the three current Presidents in place and provide stability and investment, it can grow the business. It is certainly acquiring a lot of top talent. And maybe the combination really will provide “synergies” (I hate that word, since it is almost never true) that would reinvigorate the Modicon/automation line of business.
One factor probably not to be ignored is ABB. This move makes Schneider look more like ABB with new abilities to compete broadly. There could also be increased competition with Siemens in some areas.
From the announcement that I lifted from the Invensys Website this morning:
The boards of Schneider Electric and Invensys are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which Schneider Electric and/or a wholly-owned subsidiary of Schneider Electric will acquire the entire issued and to be issued ordinary share capital of Invensys. The Offer is to be effected by means of a scheme of arrangement of Invensys under Part 26 of the Companies Act.
Under the terms of the Offer, Invensys Shareholders will be entitled to receive:
For each Invensys Share: 0.025955 New Schneider Electric Shares; and 372 pence in cash.
The Offer represents a value of:
502 pence per Invensys Share, or £3.4 billion for the entire issued and to be issued ordinary share capital of Invensys, based on the closing price per Schneider Electric Share on 11 July 2013 (being the commencement of the Offer Period) of €58.06 and an exchange rate on 11 July 2013 of £/€ 1.1592. Based on the offer value of 502 pence per Invensys Share, the Offer represents a premium of approximately: 14 per cent to the closing price per Invensys Share of 440 pence on 11 July 2013 (being the commencement of the Offer Period); and 27 per cent to the volume weighted average closing price per Invensys Share of 396 pence in the three months to 11 July 2013 (being the commencement of the Offer Period).
Commenting on the Offer, Sir Nigel Rudd, Chairman of Invensys, said:
“Following the recent disposal of Invensys Rail, the agreement with the Pension Trustees and the re-organisation of the Group, the Invensys Directors believe that Invensys is strongly positioned to execute on its growth strategy going forward.
However, the Invensys Directors believe that the offer from Schneider Electric represents an attractive value for Invensys Shareholders and reflects the future growth prospects of the business and a significant proportion of the benefits which are expected to accrue from the strong strategic fit between Invensys and Schneider Electric.
Combined with the disposal of Invensys Rail and return of £625 million to shareholders, this represents a very attractive outcome for Invensys Shareholders. Furthermore, the members of the Invensys Pension Scheme will benefit from the ongoing support of a significantly larger, leading, global automation business.”
Commenting on the Offer, Mr Jean-Pascal Tricoire, Chairman of the Board and CEO of Schneider Electric, said:
“We are delighted to announce the combination of Invensys and Schneider Electric in what is an exciting day for the stakeholders of both companies. The addition of Invensys’ businesses will considerably strengthen Schneider Electric’s overall offering to its industrial and infrastructure customer base, reinforcing us as a global leader in energy management solutions integrating power and automation, as well as leading software for customer efficiency. The transaction will allow Schneider Electric to benefit from increased scale and realise substantial synergy benefits from the combination. We believe our offer is compelling to Invensys Shareholders who will realise significant value for their holdings while having the opportunity to participate in the future strengths of the combined business.
We warmly welcome Invensys’ team and believe that the combined business will provide new and larger growth opportunities for employees and customers as well as offering Schneider Electric’s shareholders significant future value creation.”