The industrial software firm Invensys has agreed to be taken over by France's Schneider Electric in a £3.4bn deal, marking the latest swoop on a British company by a foreign rival.
The deal, which must be approved by shareholders, will bring together 16,000 employees at Invensys and Schneider's 140,000 staff, and will include a combined UK workforce of more than 4,600.
But Schneider warned of possible job losses as it revealed plans for cost savings of around €140m (£122m) a year. It said there was potential to cut costs in corporate and support functions where there is overlap, while it also signalled plans to offload non-core divisions within Invensys, including putting its appliance arm – which makes controls for washing machines – under review.
Invensys employs more than 1,100 people in the UK and has offices in Worthing and Crawley in West Sussex, as well as sites across the United States. It develops technologies for a wide range of sectors including oil refineries, air conditioning and household appliances.
Schneider has more than 3,500 employees across 15 sites in the UK, including major bases at Coventry and Telford. Sir Nigel Rudd, chairman of Invensys, said there was a "strong strategic fit" between the two companies, adding that the cash and shares offer was a "very attractive outcome" for shareholders.
Jean-Pascal Tricoire, chairman and chief executive of Schneider, said it was an "exciting day" for both companies. "We warmly welcome Invensys's team and believe that the combined business will provide new and larger growth opportunities for employees and customers," he said.
Schneider outlined plans for a £4m retention bonus pool for corporate employees worth up to 150% of salary to encourage staff to stay with the group following the takeover. Senior staff, excluding board executives, will also pick up special awards worth up to 200% of salary over a three-year period, while Schneider added that it was looking at an additional retention bonus scheme for the wider workforce. Invensys works for seven of the top 10 appliance manufacturers, 23 of the top 25 oil companies and 35 of the 50 biggest nuclear power plants.
It also held takeover discussions with the US giant Emerson Electric last year, although the talks fizzled out before any firm approach was tabled. The company has since remained firmly in the takeover spotlight and shares have nearly doubled over the past year. They were up another 2% to 503p on Wednesday. Rudd recently brushed aside concerns over another UK firm falling into foreign ownership, telling shareholders at the Invensys annual meeting last week that it was "not a British company", given that 95% of its sales were from overseas and most of its key operations were in America.
Invensys paved the way for a takeover after selling its Wiltshire-headquartered rail division on 2 May to the German high-speed train maker Siemens for £1.7bn. The deal enabled Invensys to plug the deficit in its company pension scheme, which had previously been seen as a stumbling block to takeover suitors. It paid £400m upfront into the pension fund and a further £225m that is held in a trust.
Invensys is also reorganising the business following the rail sale to save £25m a year in costs. It recently reported a 41% leap in annual operating profits to £131m, but pre-tax profits plunged to £15m from £47m as it was hit by exceptional charges, including restructuring costs.