APC merger joins rivals, leaves questions about product lines

The planned merger of APC and Schneider Electric combines two competitors for data centre backup power business - and leaves in its wake uncertainty about future product line directions.


The planned merger of American Power Conversion and French-based Schneider Electric -- announced last week -- would combine two companies that have been competitors for data centre backup power business. But it would also leave in its wake uncertainty about the companies' future product line directions.

The merger isn't expect to close until early next year.

Schneider plans to acquire APC for $6.1 billion. The two firms, through Schneider subsidiary MGE UPS Systems, have competed in the uninterruptible power supply (UPS) market. APC makes a number of other data centre products, such as cooling systems.

It's too soon to say whether customers of either firm can expect product line consolidations as a result of the merger, according to Aaron Davis, APC's vice president of marketing and communications. "One of the goals of the merger is to bring two companies together whose resources and expertise will enable them to be focused on delivering comprehensive customer solutions in critical power and energy management."

Davis said APC is also reaching out to its customers, telling them that it will continue to be well suited to meet their needs and that "one of our priorities is to make our transition to new ownership smooth and seamless for them."

One APC user, Seth Mitchell, infrastructure team leader at Slumberland, uses APC products and has experience with MGE's offerings. He said the merger will be a difficult fit.

"I don't see a lot of positives in the short term," said Mitchell, whose company operates 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."

Vishal Sapru, an analyst at Frost & Sullivan who focuses on the backup power market, said the merger will benefit APC customers by giving them better access to Schneider's product line.

The merger will give Schneider the largest market share in the power quality market. Its chief rivals include Eaton and Liebert, said Sapru. He expects the competition to increase as rivals respond to the merger.

In North America, APC has about 28 per cent of the market for backup power supply, making it the largest in the region. Eaton has 14 per cent of the market for backup power in North America, while Liebert has about 12%, and MGE -- which is stronger in Europe than in North America -- has just two per cent to three per cent, said Sapru. The global market for backup power is worth about $5.7 billion annually, and $2.4 billion in the US.

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