Schneider luminous final (1)

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Schneider luminous final (1)

  1. 1. Mergers & Acquisitions<br />Schneider Electric acquiring Luminous Power Technologies.<br />Presented by: Arpit Gupta<br />MohitMittal<br />Mohit Kakar<br />Neha Singh<br />RituBhatnagar<br />
  2. 2. <ul><li>Schneider Electric is a French global company founded in 1836 by two brothers, Eugène and AdolpheSchneider.
  3. 3. Today, the company has grown into a world leader in active energy management.
  4. 4. Products include
  5. 5. Programmable logic controllers
  6. 6. Sensors and variable frequency drives
  7. 7. Uninterrupted power supplies
  8. 8. Circuit breakers, switchgear, switchboardsand motor controllers </li></li></ul><li><ul><li>Schneider Electric's strategy involves inorganic growth and organic growth, developing its geographical positions.
  9. 9. Schneider Electric S.A. has made 53 acquisitions while taking stakes in 11 companies and 12 divestitures during period 1982 – present.
  10. 10. Recent acquisitions in India include :
  11. 11. 2011 Acquisition of Luminous
  12. 12. 2011Acquisition of Digilink</li></li></ul><li>
  13. 13. Energy <br />production<br />Energy <br />usage<br />Energymanagement<br />Wind energy<br />Solar energy<br />Tides<br />Biofuels<br />Hydrocarbons<br />Nuclear<br />Appliances<br />Climate control<br />Security<br />Motors<br />Machines<br />IT servers<br />Making energy:<br /><ul><li>Safe
  14. 14. Reliable
  15. 15. Efficient
  16. 16. Productive
  17. 17. Green</li></ul>A unique positioning<br />
  18. 18. Luminous Power Technologies Ltd.<br /><ul><li>A Leading player in Indian Inverter and power storage market.
  19. 19. Revenues of INR 11 billion for the fiscal year ending March 2011.</li></ul> A diverse portfolio :<br /><ul><li>inverters for homes and small and medium enterprises.
  20. 20. Deep-cycle batteries.
  21. 21. Uninterrupted power supply (UPS).
  22. 22. Physical infrastructure solutions for IT & Telecom.
  23. 23. Renewable energy systems (wind, solar) and engineering design & support services</li></li></ul><li>Schneider’s Acquisitions in India<br />
  24. 24. What Schneider Wanted ?<br /><ul><li>To become leader in Indian Inverter and Secured power market.
  25. 25. To gain access to a complementary retail market.
  26. 26. To broaden the product portfolio.
  27. 27. To balance its geographical exposure in India.
  28. 28. To strengthen its local research & development capabilities.
  29. 29. To reinforce its position in the home electrical space through a very large number of retail outlets.</li></li></ul><li>Why Schneider went on to acquire Luminous ?<br />1<br />Strong market potential <br />
  30. 30. Why Schneider went on to acquire Luminous ?<br />2<br />Attractive Assets<br />
  31. 31. Why Schneider went on to acquire Luminous ?<br />3<br />Leverage for Growth<br />
  32. 32. Why Schneider went on to acquire Luminous ?<br />4<br />Distribution Channels<br />
  33. 33. Valuation of Luminous Deal<br /><ul><li>74 % stake in Luminous Power Technologies for Rs 1,400 crore.
  34. 34. The remaining 26 per cent of the stake in Luminous Power Technologies remains with the three founders – Sunil Bhalla, RakeshMalhotra and Naveen Kapoor.
  35. 35. Put and call options are standing for remaining 26 %.
  36. 36. The transaction was valued at 16 times Luminous’ 2010-11 EBITDA.
  37. 37. Total net debt of INR 240 crore as of 31 March 2011.</li></li></ul><li>Financial implications for Schneider<br /><ul><li>Schneider’s eighth acquisition in India since 2000.
  38. 38. Likely to raise its sales in the country to more than Rs. 4,500 crore.
  39. 39. Triple the revenue of 2009.
  40. 40. The acquisition is expected to be accretive on earnings per share from the first year.
  41. 41. This return on capital employed of the acquisition is expected to beat Schneider Electric’s WACC in year 4.
  42. 42. Indian operations would be at 7th position in terms of Group sales all over the globe.</li></li></ul><li>Deal Structure<br /><ul><li>The deal was an all cash transaction of € 215 m.
  43. 43. Schneider personally contributed € 90 m and remaining </li></ul>€ 125 m through debt.<br /><ul><li>Grant Thornton India was the sole Financial Advisor to Luminous on the transaction.
  44. 44. Ernst & Young was the sole Financial Advisor to Schneider on the transaction.</li></li></ul><li>The Schneider gains.<br />
  45. 45. The Schneider gains.<br />
  46. 46. Schneider Electric has become a very significant player in India.<br />
  47. 47. Global Scenario in Electrical and Power equipment industry<br /><ul><li>M&A activity in the Electrical & Power Equipment industry declined in 2008 and 2009 due to the economic recession and corporations’ hesitancy to place large bets on major acquisitions.
  48. 48. However, M&A activity rebounded sharply:
  49. 49. ABB Ltd’sacquisitions of Baldor Electric (an industrial electric motor business) and Ventyx(an energy management software and smart grid technology company)
  50. 50. Emerson’sacquisition of Chloride Group PLC (a manufacturer of UPS systems).</li></li></ul><li>Global Scenario in Electrical and Power equipment industry<br /><ul><li>The global electrical components & equipment market had total revenues of $84.1 billion in 2010, representing a compound annual rate of change (CARC) of -5% for the period spanning 2006-2010.
  51. 51. The performance of the market is forecast to accelerate, with an anticipated compound annual growth rate (CAGR) of 3.2% for the five-year period 2010-2015, which is expected to drive the market to a value of $98.6 billion by the end of 2015.</li></li></ul><li>Thank You . <br />

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