Summary: Schneider Electric SA, the world's leading producer of circuit breakers, will buy American Power Conversion Corp. for $6.1 billion to become the world's leading manufacturer of equipment which prevents electrical outages. The French-based company has agreed to pay $31 a share, 30% more than the closing price, for APCC and will fund the acquisition through the sale of bonds and 1.2 billion euros of stock. While some have claimed that the deal is too costly, Schneider sees the acquisition as an opportunity to make the transition from industrial gear production to sensors and switches which are APCC's specialty. "The deal looks expensive, but Schneider's execution on M&A has been very good and the strategic fit looks sound to us," a Merrill Lynch analyst said. The deal is expected to improve Schneider's earnings per share and will close in the first quarter of 2007 pending approval by shareholders.
Potentially impacted stocks and ETFs: American Power Conversion Corp. (GM:APCC) • Competitor: Emerson Electric Company (EMR)
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