Schneider Electric leads ABB and Siemens in bid to buy Ivensys

A bidding war is brewing among power firms for control of UK engineering company Ivensys.

The current front runner to snap up the software and controls business – which is headquartered in England and has a US base in Houston (pictured) – is French company Schneider Electric, which has come in with a reported bid of $5bn.

However GE, ABB and Emerson Electric are also said to be interested in buying Ivensys, which supplies control and safety systems to fossil fuel and nuclear power plants.

Alex West, associate director of process, machinery & instrumentation at analysts IHS (NYSE: IHS), said Ivensys “has long been viewed as a potential takeover target, with Emerson calling off initial talks regarding an acquisition in the first half of 2012”.

“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.”

He said while Ivensys has a presence in the energy controls and appliance market, and is a leading industrial software supplier, more than half of its business is from its industrial automation business segment.

This includes measurement and instrumentation products, but primarily consists of control products, including distributed control systems (DCS) and process safety systems, and the company has a long-standing presence in the power, oil, gas and refining sectors.

In addition to being the leading supplier of process safety systems, Invensys accounted for 6.5 percent of the global DCS market in 2012, which was estimated at $16.8 billion, according to IHS.

West said that if its acquisition was successful, it 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 top two spots in the DCS market are occupied by the other potential Ivensys bidders,ABB and Siemens. “Both firms would also be keen to inherit IOM’s customer base,” said West.

Konkana Khaund, industry manager at consultancy Frost & Sullivan, said the possible takeover “could lead to some significant implication on competitive strategy maximization and diversification for Schneider Electric”.

He said while the industrial business of Schneider Electric would be “the prime beneficiary from such an acquisition… it is hard to ignore the imminent implications this could have on Schneider Electric’s buildings, residential and datacentre businesses”.

Khaund said that currently more than 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 recognized as a global leader in energy management, security, high performance buildings, smart homes and smart cities.”

“The immediate impact would certainly result in Schneider Electric’s capitalisation on home and building energy management, a market estimated to be over $20 billion 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.”

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