Schneider Electric Agrees to Buy PTC in $22.6 Billion Software Deal

The agreement values PTC at $205 a share in cash, according to Reuters, citing Schneider Electric’s announcement Monday. The offer represents a roughly 42% premium to PTC’s closing share price on Friday and implies an enterprise value of about $23.7 billion.

Investors reacted sharply to the price Schneider is paying. The French company’s shares fell about 10% in Paris trading, erasing close to €15 billion, or roughly $17 billion, of market value, Reuters reported. PTC shares, by contrast, surged about 34% in U.S. trading.

The acquisition represents a significant bet by Schneider Chief Executive Olivier Blum on the convergence of industrial operations, software and AI. Schneider has evolved from its traditional electrical-equipment businesses into a major supplier of infrastructure used by data centers, including cooling systems, server racks and power-distribution equipment.

Rapid construction of data centers, particularly in the United States, has become an important source of growth for the company as investment in AI drives demand for computing infrastructure, according to Reuters.

PTC would add another layer to that strategy. The Boston-based company provides software used by manufacturers to design products and manage them throughout their life cycles. Its technology gives industrial customers access to engineering and product information that Schneider believes can become increasingly valuable as companies deploy AI across factories and other operations.

Blum told investors that access to PTC’s engineering and design information could improve Schneider’s ability to apply AI to industrial processes. He described data as an increasingly important component of extracting economic value from AI, according to Reuters.

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The transaction is also expected to make recurring software revenue a larger part of Schneider’s business. The company expects software-as-a-service revenue to account for about 24% of group sales after the combination, Reuters reported.

That shift comes as investors are reassessing the value of established software businesses amid uncertainty about how generative AI could reshape the industry. Jefferies analysts said concerns over AI-driven disruption have depressed software valuations, creating an opportunity for Schneider to acquire PTC at a historically low valuation multiple while also introducing additional risk for Schneider shareholders, according to Reuters.

The acquisition follows Schneider’s agreement in June to purchase Cognite Holding, a privately owned industrial-data and AI software provider, further illustrating the company’s effort to combine its electrical and automation operations with digital products.

Schneider plans to finance the PTC purchase with a combination of new shares and debt. The company expects to raise about €5 billion to €6 billion through an equity issuance under an existing shareholder authorization and take on roughly €16 billion to €17 billion of new debt, according to Reuters.

Management is targeting €250 million in annual cost savings by the third year following completion of the transaction. Schneider also expects approximately €800 million in revenue synergies from combining the companies’ businesses, Reuters reported.

Those projections will be central to Schneider’s effort to persuade investors that the substantial premium paid for PTC can generate adequate returns. The immediate market response showed that shareholders remain cautious: Schneider’s decline helped drag France’s CAC 40 lower Monday even as the broader European STOXX 600 advanced.

Source: Reuters