|
Schneider to buy Legrand
|
 |
January 15, 2001: 10:18 a.m. ET
French electrical engineering firm agrees to buy rival for $6.4 billion
|
LONDON (CNNfn) - France's Schneider Electric said Monday it would buy rival components maker Legrand in a 6.72 billion euro ($6.4 billion) deal.
Schneider will pay seven of its shares for every two shares of Legrand, a 20 percent premium over Legrand's Friday closing price of  222, the companies said.
Analysts warned that Scheider was paying too much for its French peer and said the deal, which would create one of the world's biggest electrical component makers, could face scrutiny from European Union regulators. 
"It's a defensive move for Schneider, it made it bigger, less vulnerable to a takeover, but some people will say they did it to mask an earnings slowdown in 2001," Dan Mannor, analyst at Credit Suisse First Boston, told CNNfn.com.
Mannor said he estimated fair value for Legrand at around 210 to 220 a share.
The two French firms said the combined group would have a net profit of 840 million for 2000 on revenue of 12.4 billion, calculated as if they had already merged. The deal will enhance earnings by 2003, they added.
The combined firm would created synergies of 210 million by 2003, with 120 million of that in cost savings.
With Schneider and Legrand's high market share in a number of European countries, the deal could run into problems from antitrust regulators, Mannor and others said.
Shares in Schneider (PSU) and Legrand (PLR) were suspended from trade on the Paris exchange Monday.
Schneider's main business is in manufacturing electrical products for industry, but it also makes low voltage electrical equipment like sockets and switches.
Legrand products include automated lighting and heating controls, audio and video house porters, security systems, dimmers and timers, circuit breakers, and distribution cabinets.
--from staff and wire reports 
|
|
|
|
|
 |
|
