Shares in Invensys have jumped above 505p, the price that French firm Schneider Electric has offered for the company in a mix of cash and new Schneider stock.
Ishaq Siddiqi, market strategist, ETX Capital:
Invensys has been subject to takeover speculation for some time, particularly after selling its rail division to Siemens last year for £1.7b, so it’s not unexpected that it has a few suitors eyeing it up. Schneider’s offer makes strategic sense as Invensys will make a solid fit for Schneider’s automation portfolio, helping the company develop a stronger software offering which will allow it access into key process markets.
Invensys has been eyed before by Emerson Electric in the US but that did not result in a deal with some in the market suggesting that Invensys’ large pension was a stumbling block for potential suitors. That however has changed as the disposal of its rail division helped Invensys pay down around £490million of pensions deficit, raising interest in the company again. Schneider will no doubt have to act fast! It’s got competition as there is no doubt that Emerson will consider flirting with Invensys management again with an offer this time around.