Schneider Electric has decided to sell Legrand to the KKR-Wendel Investissement consortium
Schneider Electric has decided to sell its 98.1% stake in Legrand by implementing the sale contract signed on July 26, 2002 with the KKR-Wendel Investissement consortium.
This decision is the consequence, on the one hand, of the position adopted by the European Commission, which on November 29, 2002 considered that the corrective measures proposed by Schneider Electric did not allow it to approve the merger and, on the other, of the hostility to the merger of the two groups expressed by the leaders of Legrand.
Following the favorable ruling of the Court of First Instance of the European Communities on October 22, 2002, which annulled the veto of the European Commission against the planned merger between Schneider Electric and Legrand, the Board of Directors of Schneider Electric asked its Chairman to examine the two options open : merger with Legrand or divestiture.
In order to retain Legrand it was necessary to obtain authorization from the European Commission. The in-depth negotiations conducted with the Commission showed that its demands concerning asset disposals (companies, production assets, brands) were disproportionate, from Schneider Electric’s viewpoint, to the aim of maintaining competition in the French market.
If Schneider Electric had accepted these demands, the measures would have disorganized and demobilized the companies concerned, affected the economic interest of the planned merger and reduced considerably the level of forecasted synergies.
Moreover, on November 13, 2002, the Legrand Management Committee publicly rejected the planned merger of the two groups and refused to build a major European leader. This turnaround would have made the integration of the two companies even more difficult.
In these conditions, Schneider Electric considers that the divestiture of its stake in Legrand to the KKR-Wendel Investissment consortium is the best solution for the group, its employees and its shareholders.