France’s Schneider Electric was in talks about a £3.3 billion deal for Invensys yesterday, sending shares in the British group soaring on hopes others could still enter the fray.
Invensys, which makes control systems for chemical plants, oil and gas facilities and nuclear powers stations, has long been mooted as a takeover target in a sector dominated by larger industrial groups.
A deal by Schneider would boost the French firm’s industrial automation business.
The British company said in a statement late on Thursday it was likely to recommend Schneider’s offer of 505 pence a share, which would represent a 15 per cent premium to the stock’s Thursday close on the London Stock Exchange.
Analysts at Societe Generale said it was clear the announcement had been made without Schneider’s approval, which suggested that Invensys was keen to flush out any counter offers.
Shares in Invensys, which sold its rail unit to Siemens last year in what was seen as the start of a break up of the group, opened up 16 per cent at 510 pence on Friday.
US group Emerson Electric was in talks to buy Invensys a year ago, while a report in May 2012 said Siemens, ABB and General Electric had also made informal contact.
“The most obvious candidate is Emerson, which was in related talks with Invensys back in June 2012,” Societe Generale said.
Analysts at Morgan Stanley said the bid from Schneider made sense, and the price proposed was “fair and reasonable”, valuing the British company at a 2014 forecast price-earnings multiple of 22 times.
A deal would bolster the french company’s automation business, which has a 4.2 per cent share of the global market against industry leader Siemens at 21.2 per cent.
“The proposed acquisition would afford entry into key process automation markets and give an industry-leading software platform,” they said.
Schneider has indicated it would pay 319 pence in cash and 186 pence in new Schneider shares, Invensys said, sending its stock down 4.8 per cent at 55.35 euros.
The French group, which confirmed the talks after Invensys issued a statement on the preliminary offer, said it had until August 8 to say whether it intended to make a firm offer or walk away under UK rules.
Schneider, whose products help utilities distribute electricity and which makes automation systems for the car and water treatment industries, said last summer that it planned to step up acquisitions to boost sales and tap new markets.