French suitor raises hopes of Invensys bidding war

The engineering electronics group said it had received a cash and shares approach from Paris-based Schneider Electric worth 505p-a-share and revealed it was “likely” to recommend a firm offer at that price. Shares in Invensys closed up 15.4 per cent at 508p.

But Edinburgh-based fund manager Neil Veitch said the approach may flush out other bidders and bring a better return for investors.

Invensys sold its Wiltshire-headquartered rail division in May to German high speed train maker Siemens for £1.7bn.

The deal enabled Invensys to plug the deficit in its company pension scheme, which had previously been seen as a stumbling block to takeover suitors.

Veitch, pictured below, who manages the SVM UK Opportunities Fund, said: “Emerson, a large US industrial company, had previously expressed an interest in acquiring Invensys and with the group’s structure now considerably simplified, we believed it may be tempted to return.

“With Invensys having provided additional disclosure around divisional profitability since the Siemens announcement, we believe that the latest approach may flush out other bidders. Should this scenario materialise, the share price could go higher.”

Invensys has remained firmly in the takeover spotlight since its discussions with Emerson Electric last year, although the talks fizzled out and no offer was made.

The group, which employs more than 1,100 people in the UK out of a total global workforce of 16,500, develops technologies for a wide range of sectors including oil refineries and air conditioning and household appliances such as refrigerators.

The group works for seven of the top ten appliance manufacturers, 23 of the top 25 oil giants and 35 of the 50 biggest nuclear power plants.

Invensys is reorganising the business following the rail sale to save £25 million a year in costs. It recently reported a 41 per cent leap in annual operating profits to £131m, but pre-tax profits plunged to £15m from £47m as it was hit by exceptional charges, including restructuring costs.

Schneider said Invensys would be a “compelling” fit for the group and would increase its focus on the industry automation sector.

The French company added: “The enlarged group would significantly expand its access to key electro-intensive segments where Schneider Electric offers leading low and medium voltage as well as energy management solutions.”

The French firm has until 5pm on 8 August to make a firm offer for Invensys under City takeover rules.