What will happen if Schneider Electric takes over Invensys?

12 July 2013

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Frost & Sullivan Industry Manager Konkana Khaund comments on the news concerning the takeover talks between Invensys and Schneider Electric.

"The recent announcement of a possible takeover of Invensys by Schneider Electric could lead to some significant implication on competitive strategy maximization and diversification for Schneider Electric. The immediate industry focus is high on evaluating the outcome on the industrial business of Schneider Electric, which would be the prime beneficiary from such an acquisition, given Invensys' core competencies in this area. But it is hard to ignore the imminent implications this could have on Schneider Electric's buildings, residential and datacentre businesses.

"At present, over 50 per cent of Schneider Electric's current global revenue is accounted for by these businesses. In particular, the buildings and residential energy management business lines are expected to gain further impetus from the company strategic repositioning efforts to be recognised as a global leader in energy management, security, high-performance buildings, smart homes and smart cities. A strong line up of acquisitions in the last decade (Square D, TAC, Andovar, Kavlico, Lee Technologies, APC, Vizelia, Uniflair, Pelco, Juno Lighting), and continued innovation to vertically and horizontally integrate capabilities, supported by the company's robust software framework – StruxureWare, has already helped create a strong value proposition for these market segments. A further boost to these capabilities is inevitable, given Invensys' strong position in energy monitoring, controls and software.

"The immediate impact would certainly result in Schneider Electric's capitalisation on home and building energy management, a market estimated to be over $20billion globally, and a significant aspect of Schneider Electric's increasingly diversified corporate strategy. However, without doubt, the combined portfolio will eventually be optimised by Schneider Electric to potentially strengthen its offering in the datacentre business, particularly software solutions geared towards infrastructure and building operation level supervision, control and monitoring.

"Finally, the company's underlying interest in lighting and energy/temperature controls, an area that has been in focus through targeted acquisitions, but not fully maximised to its potential, could be a major winner. The market share line up of this segment that Schneider Electric has conspicuously remained out of, but one that is fiercely dominated by some of the company's major competitors, could witness some healthy competitive reorganization."

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