Article

Schneider Electric buys APC

Mark Fontecchio

Schneider Electric, a French electric equipment maker, has agreed to buy uninterruptible power supply (UPS) company American Power Conversion Corp. for $6.1 billion in cash.

In a statement, Schneider

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added that it plans to merge its own subsidiary MGE UPS Systems with APC's UPS systems. The deal is expected to be completed by the end of March.

APC declined comment. Representatives from Schneider Electric could not be reached.

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Whether APC's products will change because of the merger is the main question for data center managers. Clay Ryder, president of Union City, Calif.-based analyst firm The Sageza Group, said that's unlikely.

"I don't think they're going to tamper with the success of the [APC] products because it's probably complementary with the products [Schneider] offers," he said.

Ryder added that smaller UPS devices, such as those on the single-server level, will be least likely to be affected

Charles King, principal analyst for Pund-IT, a Hayward, Calif.-based analyst firm, said it looks as though Schneider thinks it can combine its own UPS subsidiary, MGE, with APC's and reduce manufacturing costs to produce better profit. What comes out the other side is the question.

"I think if Schneider is smart, they'll go through and take a close look at what APC brand products are successful and leave them alone," he said.

In its statement, Schneider said that APC had $2 billion in sales last year, with about half of that coming from the United States. Among the sales was a more than 30% growth in sales in large-scale UPS systems. But Schneider said this large growth has led to large investments in the field that have hurt APC's bottom line.

West Kingston, R.I.-based APC's stock has dropped in recent fiscal quarters amid rising earnings but even faster rising costs. Last month, APC announced layoffs that, combined with announced cuts in June, would have reduced the company's workforce by 7%. The total number of jobs that was expected to be cut was around 580, which the company said would save $37 million before taxes by the end of next year.

Schneider said the companies will cut costs by merging some divisions such as sales and service. King said he wasn't sure whether those costs -- which will include layoffs -- will be over and above the cuts that APC already announced.

One of APC's biggest competitors is Columbus, Ohio-based Emerson Network Power. Representatives for that company could not be reached by press time.

Let us know what you think about the story; e-mail: Mark Fontecchio, News Writer


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