Schneider Electric shares rise as it acquires Motivair for $850 million in cash

Investing.com -- Shares of Schneider Electric (EPA:SCHN ) rose following the company's announcement of its acquisition of a controlling interest in Motivair Corporation for $850 million. 

At 8:54 am (1254 GMT), Schneider Electric was trading 3.8% higher at €247.85.

Motivair, headquartered in Buffalo, New York, is an advanced liquid cooling solutions provider, particularly for high-performance computing systems. 

Founded in 1988, Motivair specializes in various cooling technologies, including Coolant Distribution Units, Rear Door Heat Exchangers, Cold Plates, and Heat Dissipation Units, all of which are crucial for managing thermal challenges in modern computing environments.

“We believe the demand on liquid cooling for AI data centers should sustain for the following 5-10 years, driven by continuous iteration of AI chips and rising heat dissipation requirements,” said analysts from Jefferies in note.

By acquiring Motivair, Schneider Electric aims to boost its portfolio of liquid cooling technologies, enhancing its capacity to address the thermal management needs of data centers and AI customers.

The transaction, which involves Schneider Electric buying an initial 75% interest in Motivair, is expected to close in the coming quarters, pending regulatory approvals. 

“We estimate the acquisition will add 3% to Schneider's overall data centre sales,” said analysts at Morgan Stanley in a note.

It is anticipated that Schneider Electric will acquire the remaining 25% of Motivair in 2028.

Schneider Electric's position in the data center and networks sector has been a growth driver, representing 21% of the company's orders in the previous fiscal year. 

“Overall from a strategic standpoint, we view this acquisition as a good fit,” said Morgan Stanley.

The company has seen growth in this market, with double-digit annual increases in sales since 2017. 

“Considering the liquid cooling solution is more cost-efficient to the whole data center, we forecast the global liquid cooling TAM to rally from USD997m in 2023 to USD27.8bn in 2030E, representing a 61% CAGR,” Jefferies said. 

Source: Investing.com