France's Schneider Electric makes offer for Germany's RIB Software

PARIS/FRANKFURT (Reuters) - French electrical equipment group Schneider Electric SCHN.PA has agreed to buy Germany's RIB Software RIB.DE for 1.4 billion euros ($1.5 billion) as it seeks to strengthen its expertise in smart and carbon-free buildings.

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Schneider said on Thursday it was making a cash offer of 29 euros for each share in the German construction software firm, representing a premium of 40.6% to RIB’s closing price of 20.62 euros on Feb. 12.

“This key transaction strengthens Schneider Electric’s position as a major player in the digital transformation of the engineering and construction industry,” Schneider Electric Chairman and Chief Executive Jean-Pascal Tricoire said.

RIB CEO Thomas Wolf had said in 2019 that the company was open to taking an outside investor on board.

“The deal will give us access to a lot of new clients,” Wolf told Reuters on Thursday, adding that he expected Schneider to support RIB’s expansion and to create jobs.

Schneider generates half of its revenues from selling products for buildings and data centers.

“Schneider Electric believes that the buildings of the future will be All-Digital and All-Electric”, Schneider said in a statement, adding that about 40% of global carbon emissions come from buildings, which needed to be more energy efficient.

RIB’s products would help Schneider Electric enhance its capabilities in the construction phase, which currently suffers from a high level of inefficiency due to a low adoption of digital technologies, it added.

The offer, subject to a minimum acceptance threshold of 50%, is expected to be completed in the second quarter and its results will then be fully consolidated in Schneider’s figures.

RIB is expecting to post earnings before interest, tax, depreciation and amortization of 57 million-65 million euros on revenues of 270 million-310 million euros this year. That implies a valuation multiple at the midpoint of 23.5 times core earnings.

Schneider Electric has already secured 16% of the shares from by Tom Wolf, finance chief Michael Sauer and other family shareholders as well as RIB’s treasury shares.

Wolf and Sauer will retain a combined 9% stake.

Reporting by Sudip Kar-Gupta and Arno Schuetze; Editing by Kim Coghill and Edmund Blair