Invensys Plc may be worth 80 per cent more in a breakup, as Siemens AG circles the maker of software used to run the London Underground’s subway trains.
Invensys, which traces its roots back to the 1800s, plummetted 94 per cent from its peak more than a decade ago, as revenue at its controls unit fell in five of the past six years. The slide deepened this year as Invensys named Wayne Edmunds its chief executive officer and analysts projected a decline in profit in 2012, according to data compiled by Bloomberg. After falling to a two-year low last week, the London-based company was valued at £1.8 billion ($3 billion).
While Invensys’ pension obligations are among the largest in the UK, the company would be worth more than £3 billion by valuing its businesses separately and splitting off its retirement plan, Collins Stewart said. With Invensys moving to offload its pension liabilities, it may attract a bid from Siemens, Europe’s largest engineering company, once that plan is finalised, a person familiar with Siemens’s strategy said. A buyer would get a company whose technology is used in everything from power generation to railroads and oil refining and is cheaper relative to earnings than 95 per cent of its rivals.
“There’s underlying value in their products,” Madelynn Matlock, who helps oversee $14.8 billion at Huntington Asset Advisors in Cincinnati, said in a telephone interview. “Invensys has always had some interesting businesses, but they’ve never been terribly well-managed.” A spokesman for Invensys declined to comment on the prospects for a sale or Siemens’s interest. The company was founded by a German-born British engineer named Augustus Siebe in 1819.
