Alternative Power

American Power Conversion (News - Alert) (APC) announced on Monday it is being acquired by French competitor Schneider Electric SA for $31.00 per share in cash, or approximately $6.1 billion, creating the world’s undisputed leader in uninterruptible power supply (UPS) systems as well as a preeminent provider of integrated systems for IT and data center applications.

 

The deal comes as APC has spent years and millions of dollars in an attempt to leverage its market leading position in UPS boxes to build out its systems integration business. And through the larger, enterprise-class InfraStruXure architecture, APC has seen some modest progress with customer wins for data center manageability and cooling system solutions. But the strategy, as well as commoditization by competitors like Tripp Lite and Emerson Electric, has reportedly been a drag on APC’s profit margins, which in turn has been reflected in its stagnant stock price.

 

“This transaction provides APC stockholders with an immediate and substantial cash premium for their investment in the company,” Rob Johnson, APC's president and chief executive officer, said in a press release.

 

The deal will undoubtedly result in massive layoffs. Schneider’s management has already stated its intentions to turn around operations by shifting manufacturing to Asia from its current production facilities in Rhode Island.

 

“There isn't a conference call scheduled today. APC is not making any comments today on the transaction,” said Chet Lasell, Director of Public Relations at APC.

 

The transaction is expected to close in the first quarter of 2007. It is subject to approval by APC shareholders and other customary conditions. The board has approved the transaction with Schneider Electric, and intends to recommend to APC's shareholders that they approve the transaction. APC's shareholders are expected to vote on the transaction in early 2007. Approval from Schneider Electric's shareholders is not required.

 

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Robert Liu is Executive Editor at TMCnet. Previously, he was Executive Editor at Jupitermedia and has also written for CNN, A&E, Dow Jones and Bloomberg. For more articles, please visit Robert Liu's columnist page.