Schneider

Company Update: 
Schneider Electric has announced the acquisition Cognite, a company providing industrial data and AI software. Schneider Electric will acquire 100% of Cognite for all-cash transaction of $3.1bn. Cognite generated $170m of sales in 2025, implying an EV/Sales multiple of c.18x. According to the group, Cognite's capabilities should complement those of AVEVA. The transaction is expected to close in the coming quarters.

In our view, there is a strategic sense to the acquisition as this deal will enhance the group's exposure to software, particularly on the Industrial side. That said, we find the multiple expensive at first glance despite Cognite's complementary fit with Aveva. Additionally, this will again keep Schneider's leverage towards the top end of its target and thus, limit transformative deals in the near future.

During the call, the company explained the rationale which should appease some concerns around the valuation multiple paid for the deal. Investors will also be reassured to know that the dividend policy and the buyback ambition presented at the CMD also remain unaffected.

Expert Opinion:
The deal is undeniably expensive (18x sales) but according to our analyst, the deal makes a lot of sense. The balance sheet will end up quite leveraged but considering the amount of FCF generated by the company, we don't see that as a massive issue.  

We are slightly more concerned. The AI hype is very high and what appears as a expensive yet strategically rationale deal can quickly turn into a value destroying deal if the AI capex wave fails to deliver as expected.

Furthermore, Schneider 's valuation ratios are elevated with PE26 at 29x, an all time high.  


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