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(Sharecast News) - Shares of France's Schneider Electric slid on Monday after it agreed to buy PTC in an all-cash deal that values the US software company's equity at around $22.6bn.
Headquartered in Boston, Massachusetts, PTC is a global software company that enables manufacturers and product companies to digitally transform how they design, manufacture, and service the physical products that the world relies on. It employs more than 7,000 people and supports more than 30,000 customers globally.
Under the terms of the acquisition, Schneider will pay $205 per share. This represents a 42.3% premium to the last closing share price.
Schneider said the deal creates "a leading, scaled, open and interoperable industrial software and AI franchise, driving business outcomes for customers from any system of design, control, data and intelligence".
Schneider expects to achieve 250m of highly executable cost synergies by year three and around 800m of revenue synergies. This will be driven by cross-selling across complementary customer footprints, extending channels and end-market access, broadening geographic reach and leveraging AI-enabled joint development of digital thread solutions, it said.
Chief executive Olivier Blum said: "The acquisition of PTC represents an important step forward in our ambition to lead the new era of Energy and Industrial Intelligence. Together, we are creating the industry's most complete Software & AI powerhouse and highest-quality portfolio bridging the physical and digital worlds.
"By connecting and contextualizing data across the lifecycle of products and assets, we will create a unique digital thread for the next generation of Industrial AI, helping customers to optimize their systems with greater intelligence from design and build to operate and maintain."
At 0907 BST, Schneider shares were down 8.4% at 277.60, while PTC shares were up 35% in pre-market trade at $194.00.
Angeline Ong, senior technical analyst at IG, said: "Schneider Electric isn't bolting on software, it's building a full stack to construct a moat. PTC for design, AVEVA for operations, Cognite as the AI layer connecting them, which should in theory compliment Schneider's hardware. The strategy makes sense.
"However, investors are now asking if Schneider can finance and integrate three major software assets at once without tripping a switch, and this execution risk is what's driving shares lower."