Schneider CEO: Invensys takeover a 'good deal'
Schneider Electric's takeover of British engineering company Invensys will be good for both shareholders and customers, its CEO told CNBC on Wednesday, allowing the company to compete more effectively with its rivals in the industrial software sector.
The French power equipment maker said it would buy Invensys for £3.4 billion ($5.2 billion) on Wednesday, in a deal designed to boost its industrial automation and energy businesses. The cash-and-stock offer represents a value of £5.02 per Invensys share.
(Read more: Schneider agrees $5.2 billion takeover of Invensys)
"It's a very good deal for our customers, because our customers in the infrastructure segment need integrated solutions. Invensys and Schneider are neighbors in the world of automation, but they are just covering complementary fields," Schneider's CEO and chairman, Jean-Pascal Tricoire, said in an exclusive interview with CNBC.
"And of course it's an interesting offer for Invensys shareholders. There is a significant premium," he added. "On the side of Schneider, due to the synergies that this combination brings, it's also a very interesting, valuable proposition."
On Wednesday afternoon in London, Schneider's shares closed around 2.19 percent higher, while Invensys' had risen by 0.52 percent.
Schneider estimated the merger would create savings of 160 million euros ($211.5 million) annually, from both revenue synergies and cost savings.
"There is a lot to save in the structure of our companies," Tricoire said, but added: "We want this to be a growth deal. We want to reinvest the savings into more growth for the combined operation."
When asked about potential job cuts as a result of the deal, he said: "I don't think you can ever, ever do that in the first place, but look at the business plan we have published: it's all about growth."
Invensys has long been viewed as a takeover target in an industry dominated by larger rivals such as Siemens and Mitsubishi. The U.K.-based company has annual revenues of around £1.8 billion ($2.4 billion) and a strong global presence, especially in the energy and chemicals sectors.
The deal is subject to approval by shareholders and anti-trust authorities, but Tricoire stressed: "We have complementary positions on the market– not overlapping positions."
The announcement came as Schneider released its results for the first half of the year.
It posted a 5 percent fall in net income over the six months, which Tricoire said was due predominantly to foreign exchange fluctuations and an increase in corporation tax – especially in France. Its earnings before interest, tax and amortization (EBITA) decreased by 2 percent to 1.53 billion euros ($2.0 billion).
But the company said it expects the first signs of stabilization towards the end of the year in Western Europe and continuous growth in North America, and as such maintained its full-year targets.
—By CNBC's Katrina Bishop. Follow her on Twitter @KatrinaBishop