Schneider Electric shares fall in Paris as it acquires PTC for $22.6 billion

(Il Sole 24 Ore Radiocor) - Schneider Electric’s share price has fallen on the Paris Stock Exchange following the announcement of its acquisition of the US engineering software company PTC for $22.6 billion. Although analysts consider the deal to be strategically significant, its size and its impact on the French group’s debt are causing concern. Schneider’s share price, down 9 per cent, ended up at the bottom of the CAC 40 and the Stoxx Europe indices. Schneider announced that it had reached a definitive agreement to acquire PTC for $205 per share in cash, equivalent to approximately $22.6 billion (€20.1 billion), with an implied enterprise value of $23.7 billion. The offer represents a premium of 42.3 per cent over PTC’s last closing price and a premium of 46.1 per cent over the volume-weighted average price for the 30 trading days prior to the announcement. The French electrical equipment group expects the acquisition to strengthen its position in the industrial software sector and generate annual cost synergies of approximately €250 million and revenue synergies of €800 million within three years. The transaction is expected to be completed by the third quarter of 2027, subject in particular to regulatory approval. To finance the acquisition, the largest in its history, Schneider Electric plans a capital increase of 5–6 billion euros via an Accelerated Bookbuild Offering, as well as new debt totalling 16–17 billion euros. Listed on the New York Stock Exchange, PTC is one of the world’s leading providers of software for the design of complex industrial products, engineering and data management. With over 30,000 customers worldwide, the company generated turnover of 2.4 billion euros in 2025, with an adjusted EBITA margin of around 40 per cent. Following the acquisitions of Aveva and, more recently, the Norwegian industrial software specialist Cognite, this latest acquisition confirms Schneider Electric’s ambitions in the industrial software sector. The group aims to build a global platform combining industrial software and artificial intelligence, “with an open and interoperable offering”, as highlighted in a press release. “The acquisition of PTC represents a significant step towards our ambition to become a leader in the new era of industrial intelligence and energy. Together, we are creating one of the most comprehensive and high-quality portfolios on the market in the industrial software and AI sector, bridging the gap between the physical and digital worlds’, commented Oliver Blume, the group’s CEO, as quoted in the press release. Analysts recognise the industrial merit of the acquisition, but highlight the financial implications and the potential difficulties in realising the anticipated synergies. Jefferies maintains its ‘buy’ recommendation, believing that PTC will enable Schneider Electric to fill certain gaps in its portfolio, particularly in product lifecycle management (PLM) and computer-aided design (CAD), whilst strengthening its presence in the manufacturing sector. The US investment bank also highlights PTC’s quality, noting its solid growth, high proportion of recurring revenue and strong margins. Finally, the decline in valuations of software publishers, against a backdrop of uncertainty regarding the impact of artificial intelligence on the sector, enables Schneider Electric to complete the acquisition at a historically relatively low multiple. Jefferies notes, however, that value creation will depend in part on revenue synergies, which are inherently more difficult and take longer to realise than cost savings. Uncertainties regarding the impact of AI on the valuation of industrial software could also continue to weigh on the share price. AlphaValue agrees that the deal is strategically sound, but is more cautious regarding the financial implications, given that the deal will be financed with €5–6 billion of equity and €16–17 billion of debt, bringing the leverage ratio to around three times EBITDA. The suspension of the share buyback programme in 2027 is another sign that is unlikely to go down well with the market, the experts add, also noting that following several major acquisitions, investors may be primarily concerned about the time it will take Schneider Electric to integrate the new businesses and reduce its debt. These concerns contrast with the company’s still-solid operational outlook. Deutsche Bank maintains a positive view on the group, confirming its ‘buy’ recommendation, and forecasts another dynamic quarter in the energy management sector, whilst industrial automation is also expected to post robust growth, despite a more challenging year-on-year comparison. The German bank plans to revise its organic growth target for 2026 upwards to 12–15 per cent, compared with the 10–13 per cent previously forecast; it has increased its earnings per share forecast by 2 per cent and raised the target price from 320 to 325 euros. “Large-scale M&A is generally met with a negative initial reaction from European investors, although the deals secured by Schneider Electric have generally proved astute from a strategic perspective, even if questionable from a valuation standpoint,” commented analysts at JPMorgan.