Schneider Electric buys Pelco for $1.54b

RUEIL-MALMAISON, France--Schneider Electric, a Fortune 500 specialist in automation management based here and generating $17.2 billion in sales annually, has bolstered its building automation portfolio with the acquisition of the privately held, California-based Pelco Inc., a global leader in the design, development and manufacture of video security systems. Schneider will pay $1.22 billion expressed as an enterprise value on a cash-free, debt-free basis for Pelco, along with a net present value of a tax benefit resulting from the step-up of Pelco's assets amounting to $320 million, resulting in a total cash payment at closing of $1.54 billion. Pelco will operate within Schneider's Building Automation business unit, TAC, which is headquartered in Malmo, Sweden. The company will be managed in an autonomous manner, will retain all management staff and employees, and will keep its name and logo. Operations will continue on the company's Clovis, Calif., campus virtually unchanged. "It's totally business as usual," said Pelco president and chief executive officer David McDonald, also a part-owner. "The combination of our companies will create a unique portfolio of products, services and solutions in the building management industry," Schneider Electric's executive vice-president for building automation, Arne Frank, said in a statement. "Pelco's unique position in IP-based video security represents a tremendous additional organic growth opportunity." Pelco just unveiled a line of IP cameras at this year's ISC West show, after entering the IP market with its Endura NVR product roughly two years ago. Vincent Graham is president of Security Design Services, currently a top-100 Pelco Authorized Dealer primarily selling Pelco equipment through www.cctvhardware.com. He said: "The product has always been good." Graham said if there were one thing he hoped Schneider wouldn't change it would be "the availability of the products. Everything was shipped out when [Pelco] said it would be. There weren't any problems with their ability to ship and service." Pelco proved an attractive target for a number of reasons, Schneider officials said in a statement, including high brand recognition, its broad line of end-to-end solutions, its strong R&D program and customer base, and its "solid track record of above industry growth," including CAGR of over 21 percent in 1997-2006 and sales of $506 million in 2006. The Pelco acquisition comes on the heels of a string of acquisitions by Schneider aimed at strengthening its presence on the building automation market, including TAC, Andover Controls and Invensys Building Systems. The Pelco deal must still win anti-trust and other regulatory approval and is expected to close by October of this year. For more on this story see the September issue of Security Systems News.