Invensys selling rail unit to Siemens for £1.74bn
29 Nov 2012
London - Invensys plc is selling its rail business to Siemens for £1,742 million as part of a strategy aimed at refocusing the Group around its industrial software, systems and control equipment business.
The disposal would also provide funds to address the Group’s UK pension position, enable a capital return to shareholders and provide funds for investment.
Following the salel, Invensys will focus on supplying industrial and commercial software, systems and control equipment provider to industrial and commercial customers, according to the London-based group.
These areas, which are served by Invensys Operations Management (IOM), Invensys Controls, offer attractive margins, and good long-term growth prospects and excellent cash conversion, it said.
After the rail disposal, IOM - a major supplier to the global industrial automation market - will comprise 72% of the group in terms of sales.
According to Invensys, IOM’s its technology is used in more than 200,000 plants and by more than 40,000 customers in around 180 countries, and enable 20% of the world’s electricity generation, 17% of the world’s crude oil refining and 24% of the world’s chemical production (see below).
Invensys Controls, which will comprise 28% of the retained group, supplies control equipment to a broad range of customers and operates within three lines of business (see below).
As part of its future investment strategy, Invensys said it would accelerate R&D expenditure to develop new automation software and applications that drive productivity, energy management and environmental performance.
The industrial software market is fragmented with many SMEs providing specialist software products that would be valuable additions to the portfolio, the group added.
Invensys also plans to invest in its DCS and safety systems operations to maintain its market position in these areas. The group claims to have the second largest installed base of DCS in the industry.
“We have decided to refocus the Group around our industrial software, systems and control equipment business,” said Wayne Edmunds, chief executive of Invensys.
“This transaction creates a more focused industrial software, systems and control equipment group with a significant exposure to higher growth and higher margin segments and the resources to invest in them. It also allows us to make substantial cost savings through a simplified organisational structure.”
IOM’s operations are arranged in three lines of business:
Software (Year ended 31 March 2012 revenue: £231 million)
The software line of business is by itself one of the world’s largest developers and suppliers of industrial software with leading positions in areas such as real time operations management, simulation and asset management.
Its portfolio includes:
(i) Wonderware HMI/SCADA software which is used to monitor real time operations in factories; (ii) SimSci Esscor, a supplier of simulation and training software; (iii) Avantis, a provider of asset management software; and (iv) Skelta, a provider of business process management software. Its SimSci Esscor offerings have recently been expanded by the acquisition of Spiral Software, which specialises in integrated solutions for the oil refining industry ranging from crude assay management to refinery supply chain
optimisation, enabling clients to maximise the profitability of all aspects of their business.
Systems (Year ended 31 March 2012 revenue: £765 million)
The systems line of business is a global provider of integrated, distributed control systems (DCS) and safety systems to customers operating some of the world’s largest and most complex industrial plants, such as oil refineries, power stations (both fossil fuel and nuclear) and petrochemical plants. Its Foxboro I/A DCS system has a top-three global installed base in the industry.
Equipment (Year ended 31 March 2012 revenue: £276 million)
The equipment line of business manufactures a range of high-precision measurement and instrumentation products, controllers and recorders under the Foxboro and Eurotherm brands.
Its products and services include:
• Process control and temperature control solutions in life sciences, heat
treatment, plastics and glass, where reducing customers’ cost of energy is
critical to their business success.
• Full range of pressure, flow and analytical instrumentation, including level
measurement technology.
• Data measurement, visualisation and control services for large industrial,
commercial and retail energy users, as well as full market settlement services for
managing wholesale electricity trading.
Invensys Controls:
Commercial (Year ended 31 March 2012 revenue: £85 million)
The commercial line of business offers complete connected monitoring and control retail solutions in commercial refrigeration, heating, ventilation and air-conditioning, commercial cooking, level monitoring, water monitoring and other Invensys energy monitoring products. Its major end markets are original equipment manufacturers, large project installers and system integrators in food preservation, food preparation and comfort sectors.
Wholesale (Year ended 31 March 2012 revenue: £116 million)
The wholesale line of business designs, develops, manufactures and distributes heating controls, including room thermostats, time controls, thermostatic radiator valves and under-floor heating controls, predominantly for use in residential applications. It is also the supplier of choice for climate controls in domestic and small commercial buildings, optimising energy efficiency and environmental impact.
Appliance (Year ended 31 March 2012 revenue: £291 million)
The appliance line of business is the world’s largest supplier of components and systems that control the operation of appliances in both the residential and commercial sectors. It has strong leadership positions across its key products and supplies all of the world’s top seven appliance manufacturers.
