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APC buy puts more power in Schneider’s hands

Will customers see product line consolidations?

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The planned acquisition of American Power Conversion by Schneider Electric would combine two vendors that now sell competing backup power devices for data centres, although Schneider has only a small share of that market in the US.

It’s too soon to say whether customers of either company can expect product line consolidations as a result of the $6.1 billion deal, according to APC spokesman Aaron Davis.


Nonetheless, Davis said APC officials have been reaching out to users since the deal’s announcement two weeks ago, telling them that the company will still be able to meet their needs. “One of our priorities is to make our transition to new ownership smooth and seamless for them,” Davis said.

But Seth Mitchell, infrastructure team leader at Slumberland, said he thinks the combination of Schneider and APC will be a difficult fit.

Mitchell uses APC’s uninterruptible power supply products and said he has experience with the offerings of Schneider’s MGE UPS Systems unit as well.

“I don’t see a lot of positives in the short term,” said Mitchell, whose company operates more than 100 furniture stores in 10 states. “It might look nice on a balance sheet. But getting two fierce competitors to integrate their highly contrasted ideologies to produce a cohesive set of products and services seems like a big task.”

Potential advantages

On the other hand, Vishal Sapru, an analyst at Frost & Sullivan, which focuses on the backup power market, said the acquisition should benefit APC’s customers by giving them improved access to Schneider’s line of UPS products.

The deal will give Schneider the top spot in the worldwide market for backup power devices, according to Sapru. He said that APC controls 28 per cent of the market in North America, twice as much as its closest competitor, Eaton.

France-based Schneider’s MGE unit is stronger in Europe than it is in North America, where its market share is only between two and three per cent, Sapru added.

Schneider said it expects to complete the all-cash acquisition in next year’s first quarter. APC, which also sells cooling systems and other data centre products, earned US$45.1 million on revenue of US$621.3 million in this year’s third quarter.

But Schneider said that APC’s profit margins have been hurt by the “significant investments” it has been making in large UPS systems.

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