Exclusive: Avago nears $1 billion Schneider unit buy - sources

Mon Aug 6, 2012 1:55pm EDT
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By Soyoung Kim and Christian Plumb

NEW YORK/PARIS (Reuters) - Avago Technologies Ltd (AVGO.O: Quote) is close to buying Schneider Electric SA's (SCHN.PA: Quote) U.S.-based sensors subsidiary, according to three people familiar with the matter, a deal that could fetch around $1 billion for the French conglomerate.

Avago, a chip maker that began as Hewlett-Packard Co's (HPQ.N: Quote) components division in the 1960s, is in exclusive talks to buy Schneider's Custom Sensors & Technologies unit after beating out a private equity consortium comprising Carlyle Group (CG.O: Quote) and PAI Partners in the auction, the people said.

Avago, jointly headquartered in San Jose, California, and Singapore, was spun off from Agilent Technologies Inc (A.N: Quote) in 2005, which itself had been carved out of HP in 1999.

The company, with a market capitalization of roughly $9 billion, makes semiconductors used in mobile phones, consumer appliances, power generation and renewable energy systems as well as factory automation.

The Schneider subsidiary is valued at around $1 billion, one of the people close to the deal said on Monday. Other people previously said the unit could be worth more than $1 billion.

A Schneider spokeswoman declined to comment, while Avago did not return calls for comment. All the sources asked not to be identified because the matter is not public.

Schneider hired JPMorgan Chase & Co (JPM.N: Quote) to sell the Moorpark, California-based unit last year and initially planned to start an auction around August 2011, sources told Reuters at the time. But the process was delayed as volatile financing markets made it harder and more expensive for private equity buyers to complete deals, the sources said.

As financing for leveraged buyouts has become more readily available this year, the unit has gone on the auction block this summer, according to people familiar with the matter.   Continued...