Schneider Electric announced the acquisition of PTC for $22.6 billion

French Schneider Electric has agreed to acquire American industrial software company PTC for $22.6 billion. The deal will be conducted entirely in cash, with PTC shareholders receiving $205 per share, representing a 42.3% premium to the company's last closing price. The deal's implied enterprise value is $23.7 billion.

The deal has also affected shares of European engineering software companies. PTC's shares rose roughly 34% in pre-market trading, while shares of Dassault Systèmes, Nemetschek and TeamViewer also gained. In the US, Autodesk shares rose about 1.6%, as the terms of the PTC acquisition set a new benchmark for valuations across the sector.

The reaction to Schneider Electric's shares was the opposite. The company's shares fell about 7% on Monday in Paris trading, as investors weighed the scale of the deal and the impact of taking on new debt and a possible additional share issuance. According to Reuters, this is the largest acquisition in Schneider Electric's history.

For Schneider Electric, the acquisition of PTC is a significant part of its strategy to expand into industrial software and artificial intelligence. According to the company's CEO, Olivier Blum, the deal will give Schneider a more complete position in industrial software and AI.

PTC develops software that companies use for product design, engineering, manufacturing and data management. For Schneider, acquiring it is particularly important for strengthening its product lifecycle management offering and better connecting software with its industrial automation business.

The deal is planned to be financed through a combination of new share issuance and additional debt. Schneider Electric has stated that the deal is expected to close in the third quarter of 2027, pending the relevant regulatory and shareholder approvals.

Schneider Electric projects that by the third year after the deal, it will achieve approximately €250 million in annual cost synergies and approximately €800 million in annual revenue synergies. Taking these effects fully into account, the company estimates that the deal's effective EV/Adjusted EBITA multiple will decline from roughly 21 to 13 based on 2027 projections.

At the same time, the scale of the deal also creates certain risks for investors. The PTC acquisition comes at a time when the rapid development of artificial intelligence is putting pressure on software company valuations. For this reason, Schneider's main challenge will be both justifying the high purchase price and actually achieving the planned revenue synergies.