In the latest chapter in one of the most drawn-out sagas in French history, equipment manufacturer Schneider Electric has announced that it is selling rival Legrand to US private equity firm Kohlberg Kravis Roberts and Wendel Investissement, the French investment entity.
The French electrical equipment maker said that it has decided to sell its 91.8 per cent stake in Legrand to the consortium for E3.6bn, a third less than the firm had paid the year before. The transaction, which includes an additional E1.7bn in debt, represents Europe's largest buyout to date.
Schneider acquired Legrand last year, with the intention of becoming a market-leading electrical components business. The deal was later vetoed by the European Competition Commission on competition grounds. But the European Court of First Instance, the court of appeal for decisions made by the European Competition Commission, then dismissed the Commission's ruling in October 2002.
The announcement by Schneider comes two days before the Commission's deadline to rule on its new review of the merger. By selling to the private equity consortium, the firm avoids paying the E180m break-up fee agreed with the investors in July after the deal was first struck.
In a statement, Schneider said its decision to go with KKR/Wendel was partly due to the fact the EU regulators were not satisfied with the concessions offered and partly because of Legrand's management's hostility to being taken over.
The Wendel consortium has opted to keep only 75 per cent of plug and switch maker despite acquiring 98.1 percent of the company from Schneider Electric. The consortium plans to sell off the remainder of Legrand's capital to a group of private equity firms including WestLB, HSBC Private Equity, Goldman Sachs Capital Partners and the founders of Legrand.