The acquisition of French electrical equipment maker Legrand by French holding company Wendel Investissement and US equity investment company Kohlberg Kravis Roberts & Co has been given the go-ahead by the Commission, but the fate of the company is still undecided.
The LBO arises from the Commission’s October 2001 prohibition of Schneider’s purchase of Legrand. Complying with an injunction from the Commission, Schneider had made a provisional deal to sell its 98 per cent stake in Legrand to buyout firms Wendel Investissement and Kohlberg Kravis Roberts & Co for EURO3.63 billion by December 10. However, the Court of First Instance has annulled the Commission’s decision prohibiting the merger of the two companies and so the future of the buyout is uncertain. In a statement, Schneider said “It should be noted that the annulment of the Commission’s October 10, 2001 decision means that Schneider Electric may decide not to sell Legrand to the Wendel Investissement/KKR consortium subject to the payment of a break-up fee and the reimbursement of banking costs.” Should the Legrand sale deal not go through, Schneider would need to pay the investment firms a compensation fee of EURO180 million.
The Commission assessed whether the proposed acquisition of Legrand by Wendel and KKR, should it go ahead, would raise any competition issues, focusing on emergency lighting systems and professional light fittings, areas in which Legrand and KKR are both active, the latter through its Austrian subsidiary Zumtobel. Since the operation presented only minor overlaps and there are credible competitors in these markets, the Commission found that there were no competition concerns.