$6B Deal Yields Global Power Supply Co.

French electrical equipment manufacturer Schneider Electric plans to acquire American Power Conversion (APC) in a US$6.1 billion deal to create a worldwide developer of critical power products.

Both companies make uninterruptible power supplies (UPS), devices that provide backup power to equipment such as servers when electric power fails. Customers use UPS products to ensure that data centers and corporate networks, for example, are always available, even if electrical power fails.

Schneider is also known for making a wide variety of other electrical products as well, including power monitoring units, equipment enclosures, circuit breakers, transformers and surge protectors as well as automation software and radio frequency identification products.

Schneider expects that critical power products will drive its business going forward. Both companies say they expect strong continued growth in the market for power supply products as more critical applications require continuous power and as the data center market grows. Schneider estimates that 40 percent of the market for UPS products came from data centers and 20 percent from enterprise networking in 2005.

Together, Schneider and APC expect to cut operating costs by combining their research and development, sales and service businesses. They also expect to benefit from a broader geographic reach as a single company. The bulk of APC’s sales come from North America and Asia, while Schneider’s sales mostly come from Europe and Asia.

In addition to UPS products, APC also makes cooling systems, racks, cables, power generators and surge protectors.

Schneider expects the deal to close in the first quarter of next year.

-Nancy Gohring, IDG News Service (Dublin Bureau)

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