Schneider Electric to buy PTC for $205 per share in cash

French electrical equipment giant Schneider Electric has thrived due to the AI build-out.

Schneider Electric, the maker of electrical equipment that has thrived from the AI build-out, on Monday struck a $23 billion deal to buy an industrial design software company at a bargain-basement valuation.

Schneider (FR:SU) said it's buying Boston-based (PTC) PTC for $205 a share, in cash, which is a 42% premium to Friday's close.

PTC's valuation this year had fallen as low as 13.1 times the next 12 month earnings, according to FactSet.

Schneider said the deal is priced at 13 times earnings once synergies are included, though most of that is from projected revenue synergies, which are typically harder to realize.

"AI disruption fears are still weighing on software valuations, which allows acquiring PTC at a decade-low valuation but could still weigh on [Schneider] post deal," said analysts at Jefferies led by Lucas Ferhani.

Schneider said the deal complements its own industrial AI data foundation, but investors reacted negatively, as Schneider stock fell 8% in early Paris trade.

Schneider Electric has thrived as its products are in hot demand to build out data centers. It commands nearly double the valuation of the typical stock in the French CAC 40. Its total returns of 90% over the last three years are ahead of the 23% for the CAC 40 FR:PX1 as a whole, according to FactSet.

-Steve Goldstein