Schneider Electric, the French power equipment and grid giant that’s spent billions on smart grid acquisitions, is making one of its biggest bids yet -- a 3.3-billion-pound ($5 billion) offer to buy industrial control and technology vendor Invensys. If recent history is any guide, Schneider won’t be the only bidder.
Invensys said in a Thursday statement that it has received an offer from Schneider to be acquired for 505 pence per share -- 319 pence per share in cash and 186 pence per share in new Schneider stock. That price represents a 15-percent premium over the publicly traded company’s share price, and Friday saw a commensurate bump in the company’s share price, up 16 percent, to 5.1 pounds ($7.70).
Indeed, Thursday’s move is seen by analysts as an attempt to bump up the asking price for Invensys, which has been seeking a buyer for years. Last year, the London-based company reported that Emerson, the U.S. HVAC equipment and controls giant, had approached it with an offer, only to withdraw it in June -- a result, analysts said, of Invensys’ high pension liabilities weighing it down.
Invensys sold its railroad division to Siemens last year, a move that, along with reductions in ongoing pension costs, were seen by industry analysts as preparing the company for another go at being acquired. In May, French bank Societe Generale SA reported that Emerson, the “most logical buyer,” could offer a 19 percent premium for the company, hypothetically a bit more than what Schneider is reported to have offered.
Bloomberg reports that the Royal Bank of Canada has named General Electric and ABB as interested parties, and other news reports put Siemens in the mix as well. Invensys noted that its Thursday announcement was made “without the consent of Schneider, and there can be no certainty that any firm offer will be made,” and potential bidders have so far declined to comment.
Of the potential suitors, Emerson’s business is most closely aligned with Invensys’ strengths in refrigeration, heating and remote monitoring, analysts note. On the other hand, Schneider Electric, a giant in building power control equipment and systems, has plenty of reason to want to better control lots of HVAC systems for demand response and energy efficiency purposes.
Invensys, with 16,500 employees and operations in 180 countries, also makes controls technology for industries such as oil and gas, mining and manufacturing, as well as supervisory control and data acquisition (SCADA) systems in use on the grid. Invensys’ SCADA work includes a few utility grid applications, including deployments with Cooper Power Systems and rural utilities such as South Carolina’s Santee Electric Cooperative.
The core of its utility offering is its InFusion enterprise control system, which links up SCADA with supporting Microsoft from Microsoft and SAP -- one of many smart-grid-as-enterprise platform offerings we’ve seen from the likes of General Electric, SAIC, Infosys, Oracle, and the above-named InFusion partners, to name a few.
Invensys also has some subsidiaries in the smart grid field, according to Ben Kellison, smart grid senior analyst for GTM Research. Those include Wonderware, which provides SCADA systems for utilities in Tennessee, Texas and Oregon, and Foxboro, a SCADA and distribution management system (DMS) vendor with long-time customer Middle Egypt Electrical Co., one of the country’s seven regional utilities.
These attributes could make Invensys attractive to all of the above-named smart grid giants, all of which have been spending billions in acquisitions over the past few years, for everything from software startups to giant equipment manufacturers. Schneider’s reported $5 billion offer for Invensys, while not as big as the $11.8 billion purchase of Cooper Industries by Eaton, is still among the highest we’ve seen to date in the sector.
Schneider Electric, itself an amalgamation of dozens of industry-leading brand names, capped a string of smart grid acquisitions with its $2 billion purchase of Telvent, the Spanish software and SCADA vendor that now runs many of the company’s primary smart grid businesses. At the same time, it’s been making investments on the building side of the equation as well, including its new SmartCity offering, meant to integrate smart buildings and homes, plug-in EV charging stations, distributed generation resources and city IT services into a workable whole.