Schneider CEO Says No Big Buys for ‘Foreseeable Future’
PARIS — Schneider Electric quelled speculation that the company is exploring acquiring Tyco Int’l, saying it prefers smaller deals and that no large-scale transaction is in the works for 2011.
“There is no plan of large-size acquisitions now and in the foreseeable future,” CEO Jean-Pascal Tricoire said on a conference call with analysts Wednesday, after Schneider reported first-quarter sales. Large purchases are “very, very rare,” and riskier to execute, he said.
“By the foreseeable future, I would mean the current year,” he added.
Tricoire said he decided to break with company etiquette not to comment on what he said had become increasingly “irrational” rumors that hurt the stock last week, Bloomberg reported. Schneider held preliminary talks with Tyco Int’l after approaching the company earlier this year, the news agency reported April 13, citing three people with knowledge of the matter.
Tyco declined as much as 5.2 percent after Tricoire’s comments. Tricoire said that speculation had also included a possible deal with Cooper Industries, a U.S. maker of electrical components valued at about $10.8 billion. Schneider slid 9.6 percent last week. It rose 2.3 percent to 114.25 euros in Paris today. Tricoire spoke after the close of the French stock market.
Tricoire said that while it is his duty to study all opportunities, he doesn’t want to create a “conglomerate” from Schneider, which is based near Paris. Schneider prefers smaller, bolt-on purchases that are easier to absorb and less risky, he said. It also has a tradition of pursuing amicable takeovers of other companies, he said.
“If ever we do a large acquisitions, we would be even stricter” in terms of strategic and financial metrics, Tricoire said. “Schneider is a very solid company.” The type of deal he would favor in the near future wouldn’t exceed 1 billion euros ($1.45 billion), he said.
“We can also work on medium-sized deals from one to a few billion euros,” Tricoire said. “We can’t do this policy of bolt-ons and multiple acquisitions, and at the same time pursue large acquisitions.”
Schneider’s biggest acquisitions under Tricoire include the purchase of American Power Conversion Corp. (APC) for $6.1 billion in 2007, of Pelco Inc. for $1.5 billion that same year, and of Areva SA’s power-distribution business for 1.1 billion euros last year.
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