LONDON - Schneider Electric of France agreed on Wednesday to buy the British engineering company Invensys in a cash-and-stock deal worth £3.4 billion, or $5.2 billion.
The announcement follows confirmation last month that the two European companies were in talks over a deal that would allow Schneider Electric, which provides low- and medium-voltage electrical equipment and services, to expand its operations globally.
Schneider Electric said it was offering investors in Invensys a cash-and-stock deal that valued the British company’s shares at 502 pence-a-share, a 14 percent premium on Invensys’s share closing price before the potential takeover talks were first announced on July 12.
The takeover price price is slightly below the initial figure that was discussed by the two companies in July, but includes a cash component that is 17 percent higher than the preliminary figure.
“The addition of Invensys’ businesses will considerably strengthen Schneider Electric’s overall offering to its industrial and infrastructure customer base,†the French company’s chief executive, Jean-Pascal Tricoire, said in a statement.
Shares in Invensys rose 2.5 percent in morning trading in London on Wednesday, and Schneider Electric’s stock price jumped 4.5 percent in Paris.
Invensys had long been touted as a takeover target after discussions broke down with Emerson Electric, which is based in St. Louis, over a potential deal last year. The British engineering company carries a burdensome $700 million in pension liabilities, but its financial difficulties were eased earlier this year after the sale of its rail-infrastructure business to a rival, Siemens.
For Schneider Electric, the deal is only the latest in a series of of acquisitions; the French company recently completed a number of deals, including in India and Spain.
The French company, whose annual revenues reached almost 24 million euros, or $32 billion, last year, has been making an aggressive push into emerging economies, where local construction and infrastructure projects continue at pace despite the financial crisis.
By acquiring Invensys, whose annual revenues last year were £1.8 billion, Schneider Electric will gain access to the British company’s large customer base in the oil and gas sectors, where it provides control and safety systems. Invensys also sells heating and ventilation products to large manufacturing companies.
As part of the deal, Schneider Electric said it expected around 400 million euros of revenue savings by 2018, and a further 140 million euros in cost savings by 2016.
Barclays and JPMorgan Chase advised Invensys on the deal, while Deutsche Bank, Bank of America Merrill Lynch and BNP Paribas advised Schneider Electric.
