DCS market may be crucial in Invensys bidding

Schneider Electric acquisition would boost company’s position in global markets, according to IHS Inc. comments


The announcement last week that Schneider Electric is in negotiations to purchase Invensys has led to speculation of a bidding war for the London-based company, an analyst for research firm IHS Inc. said on July 15.

“(Invensys) long has been viewed as a potential takeover target, with Emerson calling off initial talks regarding an acquisition in the first half of 2012,” said 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. With its offer, Schneider Electric has taken control of what could break out into a full-scale bidding war for IOM.”

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.

In a press release on July 15, IHS Inc. said the strength of Invensys in the industrial automation space, especially in the oil and gas market, makes it an attractive takeover target. This especially is true in the distributed control systems (DCS) market, where an acquisition by Schneider Electric would be a major market boost.

“Invensys accounted for 6.5% of the global DCS market in 2012, which was estimated at $16.8 billion," according to the IHS press release. “If successful, this acquisition would catapult Schneider Electric into the sixth spot in the DCS market and—more importantly—would enhance the company’s opportunities in selling its automation goods, including distribution products, into the rapidly growing oil and gas and the refining and petrochemical industries.”

The IHS Inc. release cited ABB and Siemens as possible contenders for the Invensys business, as they account for a combined 30% of the global DCS market revenue, it also mentioned General Electric as a possible acquisition partner.  

After last week’s announcement by Schneider Electric that it was considering a bid, industry speculation centered its 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.

- See original story from Friday below.

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