Schneider Electric to Buy Smart Grid Firm Telvent

Power gear giants are continuing their smart grid shopping spree. On Tuesday, Schneider Electric announced that it is bidding to buy software maker Telvent (s TLVT) for $40 per share, or about $2 billion. The acquisition would give Schneider, which is a massive power equipment maker, more software and IT capabilities for the power grid.
Schneider also announced on Monday that it plans to buy 74 percent of Luminous Power Technologies, which makes power grid gear — like batteries and inverters — for about $310 million. Luminous is based in New Delhi, India, while Telvent is based in Madrid, Spain, and is 40-percent owned by Spanish conglomerate Abengoa.
Schneider CEO Jean-Pascal Tricoire said on a conference call that the Telvent deal “reinforces Schneider Electric’s positions in three key infrastructure markets: smart grid, efficient infrastructures, and smart cities,” reports Bloomberg. Those three areas are where Schneider’s power gear competitors are ramping up, too, including ABB (s ABB), Siemens (s SI), GE (s GE), and even Toshiba.
About a year ago, Swiss electrical equipment giant ABB jumped feet first into the smart grid with the purchase of software maker Ventyx (from Vista Equity Partners) for over $1 billion. Then in January of this year, ABB acquired another smart grid software company Obvient. Siemens has announced a flurry of new projects and partnerships over the past couple of years looking to add on smart grid software, and has a goal to double its current growth rate in the smart grid sector to capture about $8.5 billion in global business over the next five years.
GE has acquired smart meter tech startup Remote Energy Monitoring, as well as Opal Software, which makes software and services for smart grid network testing and management. Toshiba is buying smart meter maker Landis+Gyr for $2.3 billion.
Schneider has made other acquisitions in the past, including through a joint partnership with Alstom, bought the transmission and distribution business of Areva for $3.25 billion. Schneider also bought the energy procurement and energy management provider Summit Energy for $268 million earlier this year.
Schneider’s $2 billion offer — at $40 per share — for Telvent was 16 percent higher than Telvent’s closing share price on Monday, and 36 percent higher than Telvent’s average share over the past 3 months, said Schneider. Telvent had 2010 sales of $1.09 billion, and adjusted EBITDA of $165.96 million. Telvent’s shares rose 15.27 percent on the news of the deal.
The power grid is going digital and will increasingly rely on software, analytics, computing, communications networks and data management. The power gear companies are in a strong position to make these types of purchases, and along with competing with each other, contend with IT giants like Cisco, and building automation companies like Honeywell (s HON) and Johnson Controls (s JCI).
Image courtesy of Rennett Stowe.