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Investing.com -- Schneider has reached an agreement to purchase Temasek’s 35% stake in Schneider Electric (EPA:SCHN) India Private Limited (SEIPL) joint venture for €5.5 billion, with the transaction expected to close in the coming quarters.
The SEIPL business generated €1.8 billion of Schneider’s total €2.5 billion India revenues at the end of 2024. The joint venture was formed in 2018 when Schneider and Temasek jointly acquired L&T, with Temasek contributing €635 million in cash at that time.
The acquisition price significantly exceeds the approximately $1 billion figure mentioned in a July 16 article by The Economic Times. The deal values the stake at roughly 10 times sales and more than 40 times EBITA, assuming group-level profitability.
From a financial perspective, the transaction will increase Schneider’s leverage ratio from an estimated 0.8x in 2025 to approximately 1.4x. Since the profits of the business are already fully consolidated, the additional interest costs may result in slight earnings per share dilution.
RBC commented on the deal, stating: "Not a cheap transaction, which may renew past market concerns about Schneider’s tendency for expensive M&A. Though we do note, it is only likely to have a small dilutive impact on group EPS and allows Schneider full ownership and control in one of their fastest growing business areas."
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