Electrifying acquisitions
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Data centres are generating more heat than they can handle; consuming more power than they can afford. And that crisis has encouraged energy companies to target those IT powerhouses.
In late October 2006, American Power Conversion (APC), the leading force in infrastructure products for managing data centre heat and power, became the focus for electrical equipment manufacturer, Schneider Electric, with the French company offering the write a cheque for $6.1 billion – two and a half times APC’s expected 2007 sales.
Schneider may not be as familiar a name in IT circles, but its electrical management business dwarfs the US-based company, having generated revenues of $15 billion in 2005 compared to APC’s $2 billion. Founded in the nineteenth century, it has historically dealt in gigantic electrical systems, but its strategy of down-scaling to growing markets such as IT power has, to date, been highly successful; 2006 sales grew by 17%.
Meanwhile, despite growing demand, APC has been in need of a lift. A statement from Schneider said that APC’s profitability had “dramatically deteriorated” in recent years after it made some heavy investments in ultimately unsuccessful, large-scale projects. In power, it seems, it is easier to move down-market than up.
Still, with the French company paying a 30% premium on APC’s share value some analysts questioned the wisdom of the deal. Schneider has taken out a $5.7 billion loan to pay for the acquisition, but by its own estimates stands to save just $220 million in cost-saving synergies.
Oracle spree
Meanwhile, database and business applications vendor Oracle continued a new wave of acquisition with the $219 million purchase of MetaSolv, which makes technology that helps telecommunications providers set up and maintain IP services with greater ease, and $440 million buy-out of content management software vendor Stellent.
According to Ovum analyst Mike Davis, the Stellent purchase is well-timed, as the content management market is heating up and Oracle’s offering to date has been “immature”. Although the market is still populated by scores of smaller players, three ‘gorillas’ are now emerging: EMC (through its Documentum acquisition), IBM (following its purchase of FileNet) and Oracle.
The acquisition takes Oracle’s spending on acquisitions to over $20 billion in the last two years, as it has hoovered up over 20 software makers, from the PeopleSoft and JD Edwards lines in early 2005 to the more recent addition of Siebel, Oblix and Sunopsis.
Click here to download a full table of the key acquisitions in October / November.
