PARIS French electrical engineering group Schneider Electric SA (SCHN.PA) has agreed to buy Canada's Xantrex XTX.TO for 415 million Canadian dollars ($409.3 million) to boost its renewable energy equipment operations.
The takeover announcement on Monday came ahead of the Schneider's first-half results due on Friday and amid ongoing speculation that the French group could become the target of a bid by, for instance, Switzerland's ABB ABBN.VX whose new chief executive is mulling acquisitions.
Schneider shares started 1.25 percent lower at 69.46 euros after losing 25 percent so far this year on worries about its exposure to the U.S housing market.
Schneider is a global specialist in energy management.
It said Xantrex was a top three global player in the solar and wind inverter market and synergies would give Xantrex total sales of $470 million and earnings before interest, tax and amortization (EBITA) of $69 million in 2011.
The offer represents a price per share of 15.0 Canadian dollars for Xantrex shareholders and will be paid in cash. Xantrex closed at 13.46 Canadian dollars on Friday.
"The acquisition of Xantrex will give us a unique opportunity to capture growth in the dynamic renewable energy market," Schneider Chief Executive Jean-Pascal Tricoire said in a statement.
"The addition of Xantrex will accelerate our development as a total solutions provider and extend our position as the global specialist in energy management," Tricoire added.
Schneider said the return on capital employed for the deal should be well above Schneider's financial criteria.
It said OCM Principal Opportunities Fund, which has 24.4 percent of Xantrex, will tender its shares. Schneider said the deal must be supported by 66.7 percent of Xantrex shareholders.
Under the terms of the agreement, Xantrex will undertake a court approved plan of arrangement pursuant to which a subsidiary of Schneider Electric will acquire all of the shares.
The total aggregate purchase price of 498 million Canadian dollars is inclusive of net proceeds from the sale by Xantrex of its programmable business.
Xantrex said Ametek (AME.N) had agreed to purchase its programmable power business for $120 million in cash. The business involves less than 30 percent of Xantrex's consolidated revenues and consolidated assets.
Xantrex expects to close the Ametek transaction in the third quarter, prior to the date of the meeting at which Xantrex's shareholders will consider the Schneider Electric transaction.
Xantrex said its board of directors decided last year to explore strategic alternatives to maximize value for shareholders after determining that the company was constrained for growth and undervalued in the stock market.
For this process, Xantrex's exclusive financial advisor is Morgan Stanley and legal advisors are Stikeman Elliott LLP and Dorsey & Whitney LLP.
(Reporting by Marcel Michelson; Editing by Erica Billingham)