Invensys Plc, which sold its rail business to Siemens AG last year, plans to use as much as 600 million pounds ($913 million) on acquisitions of higher-margin software businesses, Chief Executive Officer Wayne Edmunds said.
The engineering company is planning three to four “bolt-on deals” a year over the next three to four years, Edmunds said in a telephone interview, adding Invensys expects the targets to cost 30 million pounds to 50 million pounds.
“The best targets in terms of growth and availability are in software and energy controls,” said Edmunds, who took over as CEO of the London-based company in March 2011. “Often the only way to get into India or China is to acquire or partner with a local company.”
Invensys, which today reported 2013 fiscal-year operating profit before one-time items that climbed 41 percent, said before the 1.74 billion-pound Siemens deal that it received an exploratory takeover approach from Emerson Electric Co. that failed to produce an agreement. The rail-infrastructure unit sale has prompted analysts to speculate that Emerson may be tempted again.
Edmunds declined to comment today on whether further talks have been held since it reported the first set of discussions in June. He didn’t rule out the divestment of further units.
“Should situations arise such as with rail, we will certainly be sure to be sensitive to shareholder needs,” he said about the prospect of further sales.
Invensys is using 625 million pounds from the Siemens deal for pension contributions and will also return the same amount to shareholders as soon as practicable, the company said today.
The company’s software division will average 10 percent growth over the next few years, with “low single-digit” percentage expansion anticipated in the industrial automation, energy controls and appliance segments, Edmunds said. Revenue climbed 1.6 percent last year to 1.79 billion pounds.