GE prepares to counter Schneider's bid for Invensys

General Electric (GE), the $245 billion US multinational conglomerate, is planning to take on France's Schneider Electric for control of Invensys Plc by tabling a £3.5 billion ($5.3 billion) counterbid for the British industrial software group.

Just two days ago Schneider Electric had revealed that the company was negotiating with Invensys over a possible £3.3-billion takeover of the British company. (See: Schneider Electric in talks to buy UK's Invensys for around $5 bn)

Further to Schneider's proposal, the stock jumped to 508 pence on Fridays trading, while shares in Schneider Electric were down 4 per cent on Euronext, Paris.

A bidding war between GE and Schneider - two of the world's biggest industrial giants - could drive up the price for the London-based company to 550 pence a share, valuing Invensys at £3.6 billion, The Sunday Times yesterday prophecised, citing unnamed sources.

Based in the western suburbs of Paris, Schneider has proposed paying 319 pence in cash and 186 pence in new Schneider shares - a total of 505 pence, representing a 15-per cent premium to Invensys' 11 July close on the London Stock Exchange.

It has until 8 August to make a formal offer.

Analysts had earlier said that Invensys could be a potential takeover target after it sold its  (See: Siemens to acquire rail automation unit of Invensys for $2.78 bn)  unit to Siemens for £1.74 billion.

Invensys, whose business includes industrial automation systems, was in talks last year with potential suitors, including Siemens and General Electric to sell itself either completely or partially (See: Siemens to acquire rail automation unit of Invensys for $2.78 bn).

Last July, the company, run by chief executice Wayne Edmunds, said that it has ended takeover talks with US industrial giant Emerson Electric and other potential suitors, without an offer being made. (See: British engineering firm Invensys ends talks with Emerson Electric)

The company did not reveal why Emerson and others had backed off from making an offer, but potential suitors may have been deterred by Invensys's then £426-million pension deficit.

Invensys, an FTSE 250 Index company, was formed through the 1999 merger between two British engineering giants BTR plc and Siebe plc. It makes software and control systems for industrial plants, nuclear power stations and home appliances.

Of its 16,900 employees, only 1,100 people are employed in the UK, while the rest are spread in over 180 countries, where it generates more than 95 per cent of its turnover.

The company has a market cap of $3.3 billion and generated net profit of $188 million in 2012 on revenues of $2.7 billion.

Connecticut-based GE, led by Jeff Immelt, has a market cap of $245 billion, and posted net income of $13.6 billion in 2012 on revenues of $100 billion.

Its last major acquisition was in December 2012 when it purchased the aerospace-parts business of Italy's Avio SpA from British private equity firm Cinven and Italian conglomerate Finmeccanica Group, for $4.3 billion. (See: GE to buy the aerospace-parts business of Italy's Avio for $4.3 bn)

Schneider Electric, which made acquisitions worth $3.8 billion in 2011 and 2012, including Indian power-storage systems maker APW President Systems, was founded in 1836 by two brothers, Eugène I and Adolphe Schneider, who began by manufacturing electric motors and locomotives.

Today, it is a global leader in power and control solutions mainly through the over 18 strategic acquisitions it has made since the past 135 years.

The company is a specialist in integrated solutions across multiple market segments that include energy and infrastructure, industrial processes, building automation, and data centres/networks, as well as a broad presence in residential applications.

Schneider, which has a market cap of $31 billion, reported sales of $31.1 billion in 2012.