The new group, to be called Schneider Legrand, had a combined turnover of 12.4 billion euros last year, achieving a pro forma net profit of 840 million euros. Schneider Legrand will employ 94 000 people.
Henri Lachmann, chairman of Schneider said: "The new group will have the resources to become an indisputable leader in each of its businesses and each of its major geographic markets." Schneider will make a public exchange offer for all Legrand outstanding shares. The transaction has the approval of both boards and the Legrand shareholder families, who hold 40% of shares, have signed a binding agreement to contribute their shares to the offer of exchange.
"I am convinced that a tie-up between Legrand and Schneider Electric represents an exceptional opportunity and that now is the right time to seize it," said François Grappotte, chairman of Legrand.
The tie-up has long been expected in financial circles because of the close fit between the two companies and the need to compete against the likes of GE, ABB and Siemens.
Schneider Legrand may well have to make some concessions following investigation by the antitrust authorities but predicts that the deal will add 210 million euros to operating income by 2003.
Henri Lachmann stressed that Schneider was not looking to close factories or reduce sharply the workforce.
Shares in Schneider were badly hit following the announcement, falling 12% on the first day of resumed trading. Analysts were concerned that the new structure leaves Schneider facing significant earnings dilution for at least three years.
Source
Electrical and Mechanical Contractor
