A victory for Schneider … but what to do with Legrand?

Schneider Electric, the French company vindicated by a ruling of the European Court of First Instance on 22 October 2002, is now unsure whether it is worth proceeding with the long-delayed takeover of its rival Legrand. Schneider's Board of Directors is due to discuss the matter on 25 October 2002. Schneider is still technically the owner of 98% of Legrand's shares but the Commission's previous rejection of the takeover forced Schnieder to negotiate the resale of Legrand - at a loss. Schneider has found another buyer (Wendel Investissement and Kohlberg Kravis Roberts) for Legrand, but the closure of the deal depended on the outcome of Schneider's appeal to the European Court which found on 22 October 2002 broadly in favour of Schneider. Should Schneider decide to hold on to Legrand, it may try to reclaim from the Commission the fee it would have to pay the Wendel-KKR consortium to back out of the deal. The biggest problem for Schneider, however, in the judgment is the conclusion that the Commission was justified in commenting that the merged group would be overly dominant in the electrical market in France.