APC-Schneider merger raises questions: user

Possible consolidation in the UPS space has some users concerned

The planned merger of APC and Schneider Electric would combine two companies that have been competitors for datacentre backup power business. But it would also leave in its wake uncertainty about the companies’ future product line directions.

Schneider plans to acquire APC for US$6.1 billion (NZ$9.15 billion). The two firms, through Schneider subsidiary MGE UPS Systems, compete in the uninterruptible power supply (UPS) market. APC makes a number of other datacentre products, such as cooling systems.

It’s too soon to say whether customers of either firm can expect product line consolidations as a result of the merger, says Aaron Davis, APC’s vice president of marketing and communications. “One of the goals of the merger is to bring two companies together whose resources and expertise will enable them to be focused on delivering comprehensive customer solutions in critical power and energy management.”

Davis says APC is also reaching out to its customers, telling them that it will continue to be well-suited to meet their needs and that “one of our priorities is to make our transition to new ownership smooth and seamless for them”.

One APC user, Seth Mitchell, infrastructure team leader at furniture maker Slumberland in Minnesota, uses APC products and has experience with MGE’s offerings. He says the merger will be a difficult fit.

“I don’t see a lot of positives in the short term,” says Mitchell, whose company operates 100 furniture stores in 10 US states. “It might look nice on a balance sheet, but getting two fierce competitors to integrate their highly contrasted ideologies to produce a cohesive set of products and services seems like a big task.”

Vishal Sapru, an analyst at Frost & Sullivan who focuses on the backup power market, says the merger will benefit APC customers by giving them better access to Schneider’s product line.

The merger will give Schneider the largest market share in the power quality market, says Sapru. He expects competition in the sector to increase as rivals respond to the merger.

The global market for backup power is worth about US$5.7 billion annually, Sapru says.

The merger isn’t expected to close until early next year.

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