BEIJING, July 9 /Xinhua-PRNewswire/ -- Schneider's acquisition of APC implies the formation of an alliance between them. APC and Merlin Gerin will integrate in the areas of services, market and products.
With $6.1 billion, Schneider has acquired APC and plans to merge it into its own UPS subsidiary Merlin Gerin. From then on, APC and Merlin Gerin will no longer be competitors. They will operate in the UPS market as strategic partners of the same company.
After the acquisition is completed, APC and Merlin Gerin will integrate in four aspects.
Firstly, human resources. After its merger with Merlin Gerin, APC China will adopt a scheme of “One CEO, two financial systems” for a period of time in the future. This implies that APC will continue to independently operate its previous small and medium power UPS businesses, while Merlin Gerin will also adhere to its big power UPS business model, without change.
Secondly, corporate culture. APC's corporate culture mainly features expansion and innovation. APC has actively introduced its own philosophy. In 1996, it introduced the concept of network UPS. In 2002, it borrowed the concept of the American Application Association and introduced the idea of NCPI. By comparison, Merlin Gerin places more emphasis on technology R&D. But, it is rather conservative when it comes to conceptual innovations. After their merger, APC and Merlin Gerin are expected to gradually integrate their corporate cultures within one year and form a corporate culture of activism, initiatives and independent innovations.
Thirdly, price. To adapt to price wars, APC has improved the price/performance ratio of its small power products and engaged in fierce competitions with other firms. In the middle- and high-end market, APC has put forward its completely new concept to guide and inculcate its existing and potential customers to avoid price wars, while maintaining a rather high profit margin. After the new APC-Merlin Gerin company is formed, Merlin Gerin will make UPS products in Dongguan, while APC will mainly produce small power UPS products in Suzhou and Yingfei products (including racks, air conditioners and so on) in Xiamen. Because Merlin Gerin has achieved production in China, it is expected to lower the price of its big power UPS products. Because APC needs to integrate two factories, it takes time for the company to make adjustments. No price cuts are expected in the short term.
Finally, products. Merlin Gerin and APC both have their own product features. Merlin Gerin is a typical online UPS maker, while APC is a typical online interactive UPS producer. After their merger, APC's former Xiukang products will be given up. CCID Consulting predicts that it will be very difficult to integrate Merlin Gerin's small power UPS products into APC. Like Xiukang, such products will be eliminated. Schneider's best strategy is to sell Merlin Gerin's small power products in order to get maximum economic returns.
CCID Consulting predicts that thanks to global business coverage and a strong production capacity in Asia and drawing upon Merlin Gerin's strength in the services field, the merger will save the new enterprise some $200 million in funds. It will also further accelerate its earning power in the big UPS field.
For more information, please contact:
Cynthia Liu
Coordinating Manager
CCID Consulting Co., Ltd
Tel: +86-10-8855-9080
Email: liuyan@ccidconsulting.com
