The start of a bidding war?

A possible acquisition of Invensys Operations Management (IOM), for a proposed $5.0bn by Schneider Electric, has led to speculation of a potential bidding war for the UK engineering company.

“IOM long has been viewed as a potential takeover target, with Emerson calling off initial talks regarding an acquisition in the first half of 2012,” said Alex West, associate director, process, machinery & instrumentation for information and analytics provider HIS. “However, other industrial automation giants, including European firms ABB and Siemens as well as the US-based General Electric, also have all reportedly made preliminary contact previously. With its offer, Schneider Electric has taken control of what could break out into a full scale bidding war for IOM.”

While IOM has a presence in the energy controls and appliance market, and is an industrial software supplier, more than half of its business is from its Industrial Automation business segment. This includes measurement and instrumentation products, but primarily consists of control products, including distributed control systems (DCS) and process safety systems. In particular, the company has established a long standing presence in the growing power, oil, gas and refining sectors.

In addition to being a supplier of process safety systems, Invensys accounted for 6.5% of the global DCS market in 2012, which was estimated at $16.8bn, according to IHS. If successful, this acquisition would catapult Schneider Electric into the sixth spot in the DCS market and, more importantly, would enhance the company’s opportunities in selling its automation goods, including distribution products, into the rapidly growing oil

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