Schneider Electric Acquires Andover Controls To Strengthen Positions in Building Automation While Expanding in Security
Rueil-Malmaison, France, May 19, 2004 – Schneider Electric announces today the acquisition of US-based Andover Controls Corporation, a Balfour Beatty (LSE: BBY) company. Andover Controls is of a highly successful player in Building Automation and Security, with sales of $169 million in 2003.
A major step to becoming a leader in Building Automation while expanding in Security
Building Automation (regulating, monitoring and controlling a building’s utilities) is one of the new growth platforms identified by Schneider Electric as part of its strategy to develop in strategically-related activities with high growth potential. The June 2003 acquisition of TAC enabled Schneider Electric to become a major player in Building Automation. Andover Controls will considerably strengthen its positions, notably in the US market and in the field of integrated systems. Both companies will strongly benefit from their complementary market positions.
Security is increasingly a major need of customers in the Building market that Schneider Electric wants to address. Electronic Security (intruder alarms, access control and CCTV systems) is a key Building Automation application, and today being able to provide both open Building Automation and Security systems represents a real competitive advantage. With Andover Controls, Schneider Electric will expand its Security capabilities and benefit from a platform well suited for expansion in electronic Security, which is a €20 billion market growing by 7% a year.
Andover Controls: a highly successful player in Building Automation and Security
A major step in Schneider Electric’s growth strategy
Henri Lachmann, Chairman and CEO of Schneider Electric, commented: “This acquisition of a focused and very well managed company in Building Automation and Security fits perfectly with our strategy of developing our new growth platforms. Andover Controls will bring us a new dimension, notably in the US, with a strong reputation, a large installed base and a high quality offering. Combined with the competencies of T.A.C, Andover Controls will make us the clear leader in open and integrated Building Automation systems, while providing a strong basis for future expansion in Security. With these two key players, Schneider Electric will be able to offer a valuable alternative to the largest competitors and meet growing customer needs for comfort, efficiency and security.”
The sale of Andover Controls reflects Balfour Beatty recognition that with the continued consolidation in the Building Automation and Security industry, of which Schneider Electric has been a major participant, enhanced growth and value would be maximized through the decision to sell.
Subject to regulatory approvals, Schneider Electric will pay $403 million in cash to acquire 100% of Andover Controls’ shares, representing an enterprise value of $335 million and including a US tax benefit of a section 338(h)(10) election for $68 million.
In accordance with Schneider Electric’s acquisition criteria, the return on capital employed will cover Schneider Electric’s weighted average cost of capital in 2006.
About Andover Controls
Andover Control’s scalable, networked, integrated Building Automation and Security products and solutions, comprehensive customer training and value adding after sale support have led to its 28 years of successful growth and profitability. The company has 690 employees worldwide and recorded sales of $169 million in 2003 with an operating margin of 16.7%.
About Schneider Electric