Schneider Electric Buys Leader & Harvest in China

Schneider Electric will acquire Leader Harvest Power Technologies Holdings Limited in China. Leader & Harvest brings to Schneider Electric technical competency in MV drive technology, strong position in MV system drives in the Chinese market, which represents about 40% of the global MV drive market and enhanced solutions offerings, especially in the end-markets such as cement, mining and metals and energy.

Schneider Electric recently estimated that energy efficiency would represent an incremental market opportunity of USD45 billion annually by year 2020, a significant portion of which would come from the industrial end-markets in new economies. Drives can provide up to 50% energy savings for industrial motors. MV drives are particularly used in energy-intensive markets such as power generation, mining, minerals and metals, oil and gas, water and water treatment. It is estimated that about 70% of the world’s medium voltage motors are not yet equipped with drives.

Clemens Blum, Executive Vice-President of Schneider Electric’s Industry business, commented: “Leader & Harvest’s range represents an excellent addition to our industrial automation range of products and solutions. Medium voltage drives are a key element of energy efficient solutions to our key target segments of mining, minerals & metals and water & waste water. The transaction also enlarges our customer reach and presence in China which is a key market for our business. It also provides us with the opportunity to increase our penetration in a number of countries, especially in the new economies.”

Schneider Electric expects the transaction to be highly synergetic with estimated EBITA impact from synergies of USD 25-30 million in 2015. This would be generated primarily by revenue synergies of USD115 million, to be achieved through cross-selling opportunities to the two companies’ customer bases in China as well as geographical expansion. Schneider Electric also expects cost synergies by adding Leader & Harvest to its business platform in China.

The total purchase price for the company is about USD 650 million (~ € 450 million) on an enterprise value basis, subject to certain adjustments. The completion of the transaction is subject to regulatory approvals. This acquisition is expected to be accretive on earnings per share from year 1 and to meet Schneider Electric’s Return on Capital Employed criteria in 2015.