Schneider Electric’s $23.7bn purchase of software company PT C is tantamount to a bold call that the rules of manufacturing are undergoing dramatic change. The dismal reaction by its investors, however, is a reminder that the principles of sound corporate finance are the same as ever. The French group justified its splurge on PT C by arguing that the lines between hardware and software are blurring. Schneider’s electrical equipment generates data that its software tools can use to automatically tweak designs and make systems run more efficiently.
Yet news of the deal wiped about €15bn from Schneider’s market capitalisation. That’s roughly twice the present value of the synergies the buyer thinks it can extract from the deal. Schneider reckons three-quarters of the financial benefits will come from extra revenue. Only €250mn a year from cost savings. But the fall in Schneider’s own market value suggests investors don’t merely think it has overpaid: they think its own business will be less valuable.
Branching out into software also leaves Schneider’s stock exposed to a market that has made investors distinctly twitchy this year. In other corners of finance, investors seem surprisingly willing to reward some companies’ long-term visions, like Space X or the looming $2tn IPO of Anthropic. Schneider isn’t getting the same benefit of the doubt, despite making a much smaller bet. Perhaps outside of Silicon Valley, the old standard — near-term profitability matters — still applies.
Sumber: Financial Times Companies · Diringkas oleh HeadlinesBriefing