This $23 billion software deal was struck at a decade-low valuation, as AI winner takes out loser

By Steve Goldstein

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 artificial intelligence 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 is buying Boston-based PTC (PTC) for $205 a share in cash, representing a 42% premium to Friday's close.

PTC's stock soared 35% to nearly $195 in early New York trade.

PTC's valuation this year had fallen as low as 13.1 times the next 12 months' 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 10% in Paris trade.

Schneider Electric has thrived as its products are in hot demand for data-center build-outs. 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.

In early U.S. trade, rival software makers advanced on hopes they could be bought, as Procore Technologies (PCOR) stock rose 7% and Autodesk (ADSK) shares rose 5%. Analysts at Stifel said Procore was the most "digestible" to a potential acquirer, of the two.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-05-26 0958ET