The Wendel Consortium, which consists of Kohlberg Kravis Roberts & Co. (KKR), a private equity firm, and Wendel Investissement, a French conglomerate, said they had entered into exclusive negotiations to buy Legrand for $3.6 billion from Schneider Electric.
Schneider bought Legrand in July 2001 for $5.2 billion plus the assumption of $1.26 billion of debt. European regulators blocked the deal on antitrust grounds in October and ordered Schneider to sell Legrand by February. Schneider is appealing the ruling.
Under the proposed deal with KKR and Wendel, Schneider could still hold onto Legrand, if it wins its appeal to the European Union Commission. A decision is expected this fall.
While the two companies are competitors in the European market, their product lines do not overlap in North America. Schneider Electric SA is best known in North America through its Square D, Telemecanique, Merlin Gerin and MGE UPS subsidiaries, and its leading positions in many areas of the distribution equipment market and in some parts of the industrial controls market.
Legrand has grown in North America through acquisitions that include Pass & Seymour, Wiremold, The Watt Stopper, Ortronics, Slater Electric and Caribe GE Wiring Devices.
Ever since Schneider was ordered to sell Legrand, it considered an initial public offering, a spinoff and an outright sale. Schneider owns 98 percent of Legrand, with the remaining 2 percent held by other investors.
According to a June 21 article in The New York Times, Legrand has attracted several potential suitors in recent months, including Siemens, and a private equity group made up of BC Partners and Cinven. Those firms have dropped out of the bidding for the moment, the article said.