PARIS – Schneider Electric SA, the parent company of South Kingstown-based APC by Schneider Electric, said it’s “not currently” in takeover talks with Tyco International Inc. following a report in the Wall Street Journal that the company made a $30 billion proposal that Tyco is studying.
Schneider has been working with bankers to explore a possible bid for the U.S. maker of fire security systems, according to three people familiar with the situation. Schneider has hired JPMorgan Chase & Co. and Bank of America Merrill Lynch as advisers, the Wall Street Journal and the Daily Telegraph reported on Tuesday, citing unidentified people.
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Buying Tyco would mark Schneider’s biggest-ever takeover and would add ADT, the largest security systems firm as well as fire-prevention equipment and valves used in water systems. A purchase would be the biggest yet by a European industrial company, and Schneider would seek to sell on some assets that don’t fit with its portfolio and growth plans, analysts said.
“Schneider’s statement leaves the door open, and it’s in their interest to calm things down as Tyco has risen a lot,” said Pierre Boucheny, a Paris-based analyst at Kepler Capital Markets. “The market’s message to Schneider is that there’s a funding issue and that they have to come up with a clear divestment plan.”
Stock Rebounds
Schneider rose as much as 3 euros, or 2.7 percent, to 115.5 euros in Paris. The stock had fallen about 7.6 percent in the last two days on concern a purchase would stretch Schneider’s finances. Tyco advanced as much as 9.6 percent on Tuesday, for a value of about $24.79 billion.
The French maker of electronic components said it’s responding to market speculation and plans no further comment regarding a potential transaction.
“The fact that Schneider ‘is not in talks with Tyco’ is not the same as ‘was not in talks with Tyco nor has ever been in talks with Tyco,” said Ben Uglow, an analyst at Morgan Stanley, in a note to clients. ‘‘We suspect that the French company may well have been in early stage negotiations.”
Tyco’s board retained Goldman Sachs Group Inc. as an adviser and is studying the bid, according to the report in the Telegraph. Schneider, based in the Paris suburb of Rueil-Malmaison, and the banks have worked together since September, the Telegraph said.
Raising Cash?
Schneider could raise about $5 billion selling Tyco businesses such as the fire protection unit, Boucheny said. The acquisition would help reinforce Schneider’s building automation and security systems, the company’s weakest businesses, and would let it benefit from emerging market growth, he said.
Schneider, which beat General Electric Co. to a French power-transmission business last year, has sought to expand in factory automation and building controls, where it trails companies including Siemens AG of Germany and Honeywell International Inc.
Tyco split into three publicly traded entities in 2007, including the former parent company, which CEO Edward Breen runs from West Windsor, N.J., though the headquarters has since moved to Switzerland. Tyco posted sales of $17 billion for the fiscal year ended in September. The company reports second-quarter results on April 28.
