France's Schneider Electric said it was in early talks to buy Invensys to boost its industry automation business in a deal that UK-based Invensys said valued it at about 3.3 billion pounds ($5 billion).
Invensys said it was likely to recommend Schneider's offer of 505 pence a share, which would represent a 15 percent premium to the stock's Thursday close on the London Stock Exchange.
Schneider has indicated it would pay 319 pence in cash and 186 pence in new Schneider shares, Invensys said in an emailed statement.
The French group, which confirmed the talks after Invensys issued a statement on the preliminary offer, said it had until Aug. 8 to say whether it intended to make a firm offer or walk away under UK rules. This could be extended with UK takeover panel consent.