Schneider Electric Issues €6 Billion in Bonds to Fund PTC Deal
Key Facts
Schneider Electric launched a multi-tranche €6 billion senior bond issue on October 26 to finance its proposed acquisition of PTC. The company said in the offering statement that the bonds have an average maturity of 8.2 years and an average coupon of about 4.3%. The issue is intended to fund the announced deal, which has not yet closed and remains subject to closing conditions. The financing follows the company's announcement on October 5 of a cash offer to acquire PTC. Schneider is targeting completion by the third quarter of 2027, subject to the required approvals.
The agreement offers PTC shareholders $205 in cash for each share, valuing the equity at about $22.6 billion. The deal's enterprise value rises to $23.7 billion, according to PTC's announcement. The company said the consideration represents a 42.3% premium to its last closing share price before the announcement. It also represents a 46.1% premium to the volume-weighted average price during the 30 trading days before the announcement. These figures put the cash offer and stated premium at the center of the bond-financed deal.
PTC provides software for designing industrial products and managing their data throughout their life cycle, according to the company's description. PTC said it has more than 30,000 customers worldwide. Its capabilities include computer-aided design and product lifecycle management software, which help customers design complex physical products. The acquisition gives Schneider a foothold in software linked to industrial products, according to the announced deal description. This business remains part of the proposed transaction until its closing conditions are met.
Schneider estimated annual cost savings of about €250 million by the third year and projected revenue synergies of about €800 million. PTC cited both figures among the estimates associated with the deal. The cost-savings target applies to the third year, while the revenue synergies relate to execution of the deal, with no comparable time frame specified in the statement. The company said value creation could take five years, according to a Reuters Breakingviews analysis published after the deal announcement. These estimates come in the context of a cash deal with an enterprise value of $23.7 billion.
Schneider Electric shares fell about 10% on October 5, the day the deal was announced, according to Reuters Breakingviews. The analysis said investors may worry that the deal will distract the company from gains tied to the data-center boom. It noted that the company said value creation could take five years. In trading on October 28, Schneider's shares, represented by the ticker SBGSY, closed at $54.89, compared with $54.13 the previous day. PTC shares closed at $194.97 on October 28, versus $194.62 on October 27.
The deal is expected to close by the third quarter of 2027, according to the announced target, after customary closing conditions are met. These include approval by PTC shareholders and the required regulatory approvals. The bond issue therefore forms part of the financing for a proposed acquisition and does not by itself mean the deal has closed. Completion of the acquisition depends on securing the necessary approvals before closing. The third quarter of 2027 remains the target completion date set by the company.