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Schneider's $268M Acquisition of Summit Energy Tightens EECA Market

<p>Schneider Electric plans to buy Summit Energy in the second major deal announced this week involving power plays among companies working to make the built environment more energy efficient, smarter and better connected.</p>

In a bid to strengthen its position in energy management services, Schneider Electric plans to acquire energy procurement and sustainability services company Summit Energy Services Inc. for $268 million.

Schneider Electric, headquartered in Rueil-Malmaison, France, announced yesterday that it had reached an agreement to purchase Summit Energy, based in Louisville, Ken.

The transaction, which is subject to regulatory approval and closing conditions, is the second major deal announced this week involving companies working to make the built environment more energy efficient, smarter and better connected.

On Tuesday, IBM announced plans to acquire Tririga, the developer of enterprise software for real estate and facility management, for an undisclosed sum.

“The acquisition of Summit Energy allows Schneider Electric to broaden our energy management services and solution portfolio, offering customers the ability to manage and optimize their energy consumption from the supply side through the demand side, while also growing our energy and environmental online reporting capabilities,” Chris Curtis, Schneider Electric’s senior executive vice president for North America, said in a statement. 

In the announcement, Summit Energy's President and CEO Steve Wilhite said: “In recent years, we have invested heavily in people and technology to serve our clients. In combining our strengths with Schneider Electric’s resources, Summit Energy will be even better positioned to lead our clients to cost-effective and sustainable energy.”

In the broader context of energy and carbon management, "the recent acquisitions by Schneider Electric and IBM for energy management and software companies show the continued move of larger companies to shore up their offerings," said Paul Baier, vice president of sustainability consulting at Groom Energy and senior contributor in comments provided via email.

Schneider executives like to say their company has power devices in 70 percent of the world's buildings. Specializing in integrated solutions, Schneider points to a track record of work involving energy and infrastructure, industrial processes, building automation, data centers and related networks and in the residential market. 

The acquisition of Summit Energy brings Schneider a heavy hitter in the field of customer-focused service platforms for energy procurement and energy management. According to Summit, the 20-year-old firm manages more than $20 billion in annual energy spend for 650-plus companies with facilities in some 90 countries. Summit expects to generate about $65 million in sales this year.

Like many firms operating in the efficiency space, Summit moved from a traditional approach to energy management to expanded offerings that reflect customers' growing needs for sophisticated tools to calculate and manage carbon data. With its product dashboarDView, Summit was considered among the top 10 companies providing energy enterprise carbon accounting last year, according to the 2011 Enterprise Energy and Carbon Accounting Buyers Guide produced by Groom Energy and

[Editor's Note: This page was updated on April 1, 2011, to correct the reference to Oracle's recent acquisition of select intellectual property assets of Ndevr environmental reporting. Oracle did not purchase the entire company.]

Such standing made Summit, and other firms like it, attractive to larger companies, such as Schneider. Transactions, like the ones announced this week, are expected to become a growing pattern.

Baier pointed to other notable acquisitions in the past six months of smaller, nimble and relatively young firms -- or some of their key assets -- by larger, well-established, big-name organizations. They include, he said, EnerNOC's purchase of M2M Communications, a wireless technology provider of energy management systems, and Global Energy Partners, a leader in designing energy demand response programs; Seimens' acquisition of Site Controls, an energy management software company; Johnson Controls' purchase of demand response specialist, EnergyConnect; and Oracle’s purchase of intellectual property assets from Ndevr for environmental reporting software.

"Look for these large companies -- as well as others like Honeywell, Ingersoll Rand and Rockwell -- to make more acquisitions," Baier said. "Smaller firms that could be acquisition targets include Pace Global, Entech, ENXSuite, Hara and World Energy. With energy prices beginning to rise and senior management teams much more aware of the energy savings opportunity in their organizations, large corporations are demanding broader and more sophisticated energy management solutions."

Interestingly, the transaction announced yesterday echoes transformation strategy pursued by Schneider Electric executives across the company's 170-year history. Brothers Adolphe and Eugne Schneider started their business in 1836 by acquiring mines, forges and foundries, positioning their firm as a force in armaments as well as the Industrial Revolution.

The company was quick to explore possibilites of electricity and by the second decade of the last century, the company was shedding its interest in the weapons industry and focusing on construction, iron, steel and electricity. Now in the second decade of the 21st century, Schneider is working to solidify a position as a power player in end-to-end energy and sustainability solutions for the built environment.

Schneider execs talked to editors about the latest permutations in the company's transformation strategy last fall. And in presentations at the State of Green Business forum in Chicago and Washington, D.C., company executives joined others in invitation-only discussions on how to ratchet up the efficiency, intelligence and connectivity of buildings and the energy that powers them.

Thus far, strategic partnerships -- such as Schneider's collaboration with IBM and others on specific projects -- have had a more prominent role in Schneider's business moves than acquisitions. In January 2010, Schneider announced that it and power generation and infrastructure firm Alstom would jointly acquire the transmissions and distribution business of Areva, the French multinational industrial conglomerate Areva, which is chiefly known for its work in nuclear power. That transaction closed in June.

Image courtesy of Schneider Electric.

Want to move beyond spreadsheets to manage carbon data but are confused by the large number of vendors? Groom Energy and have teamed up for the 2011 Enterprise Energy and Carbon Accounting Buyers Guide to give you a clear understanding and analysis of this rapidly expanding market based on meetings, demos, and analysis with 32 software vendors.

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