Schneider Electric Purchases Pelco for $1.54B

Rueil-Malmaison, France

French global electrical and building automation conglomerate Schneider Electric has announced the acquisition of California-based Pelco Inc., a privately held worldwide leader in the design, development and manufacturing of video security systems. Schneider Electric, which bases its U.S. operations out of Palatine, Ill., will pay $1.54 billion for Pelco, which serves 130 countries, employs 2,200 people worldwide and had sales of $506 million in 2006.

Pelco will become a focal point of Schneider Electric’s Building Automation business unit, where it will nearly triple the size of its present Fire & Security Product Division.

Although Schneider Electric has been around for more than 170 years, it only recently ventured into building automation, which encompasses power and HVAC control, electronic security and fire safety. In addition to the Pelco purchase, the acquisitions of TAC, Andover Controls and Invensys Building Systems have enabled Schneider Electric to become one of the industry’s major players.

Scott Schafer, Pelco’s senior vice president, marketing and North America sales, tells Security Sales & Integration the company will operate autonomously inside of Schneider, reporting to the TAC division, which is headquartered in Malmo, Sweden.

“That’s why they picked us. Because we have good, solid growth and profitability, and we continue to lead the industry,” Schafer says. “From what we have seen, they retain the management teams [they acquire] and keep those groups working as independent units.”

Schneider Electric serves the residential, building, industry and energy and infrastructure markets. With 112,000 employees and operations in 190 countries, the company generated sales of $13.7 billion (Euro) in 2006 through more than 15,000 distributor outlets.

Schneider’s global footprint will help facilitate Pelco’s concerted efforts to grow its international client base.

“I think that is one of the biggest opportunities we see is that perhaps we can extend our international reach even faster,” Schafer says. “They certainly have driven great focus in their company, they have shown a good ability to grow. It is nice to know we are part of a growth company that can maybe provide some solid leadership to us as we continue to grow.”

According to a statement from Schneider Electric: “The video security industry is the most attractive segment of the security industry. It is shifting from pure analog communication protocols to more high value-added IP protocol and software-based solutions. It complements/replaces other security systems such as intruder detection, fire alarm or access control. Pelco is the best possible fit for Schneider Electric to expand into building automation and security.”

Arne Frank, executive vice president of Schneider Electric’s Building Automation business unit, says, “The combination of our companies will create a unique portfolio of products, services and solutions in the building management industry. Pelco’s unique position in IP-based video security represents a tremendous additional organic growth opportunity. With this acquisition, a very important additional step is made to further reinforce our leadership in open and integrated solutions for Building IT®.”

Pelco President and CEO David Mc Donald says, “Schneider Electric is an ideal partner for Pelco. Both companies share the same commitment to people, innovation and customer service that will make our combined enterprise an even stronger, more competitive player in the industry. We look forward to the unique benefits this partnership will bring to our customers and employees.”

The transaction is subject to anti-trust and other regulatory approval and is expected to close by October 2007.

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