Schneider Electric’s acquisition of Pelco is expected to close by October 2007.

Schneider Electric, Rueil-Malmaison, France, acquired Clovis-Calif.-based Pelco Inc., a privately held video security system company. In an exclusive interview from France, Eric Pilaud, executive vice president strategy, customers and technology at Schneider Electric toldSDMthat after two years of working together through commercial partnerships and integration, Pelco decided that it was ready to sell and that Schneider was a good fit.

Pelco will become part of Schneider Electric’s Building Automation business unit (headquartered in Malmo, Sweden), which already includes previous acquisitions of TAC, Andover Controls and Invensys Building Systems. Building Automation makes up about 50 percent of Schneider Electric’s business and includes power, HVAC, electronic security and fire safety.

“Pelco is a leader in video security and as we partnered together, we were convinced that our values were compatible and that we had a good fit. The company’s products also lend itself to synergies between our businesses in this area,” Pilaud said. Pelco, which recorded sales of $506 million in 2006, manufactures domes, IP video systems and DVRs.

Pilaud said the acquisition will allow Schneider to offer complete integrated packages of building control, HVAC and security systems and management, at lower investment and lower operation costs to customers. Security management, power and HVAC control are increasingly integrated into a building automation system to answer growing customers’ needs for security and energy efficiency.

The majority of Pelco’s business is in the United States, and the acquisition will lend itself to significant growth throughout the world, Pilaud emphasized, leveraging Schneider Electric’s worldwide customer base. Pelco’s California-based headquarters will remain the same and operations and customer service will also continue to operate as normal, according to Pilaud.

“Pelco will continue to operate its customer service and logistics. Part of the value of this acquisition is that we can help accelerate the growth of this operation with our distribution network around the world without incurring extra cost,” Pilaud said.

Pelco’s entire management team and all of the company’s employees will continue as employees of Pelco with this transaction. The company name and the Pelco brand also will remain unchanged.

In a statement, David McDonald, president and CEO of Pelco, said, “After operating for 20 years as an independent business, the right time has come to partner with a strong, high-quality, Fortune 500 company such as Schneider Electric. The combined strengths of both organizations will yield for Pelco, many substantial benefits such as increased career opportunities for our people, broader product offerings, access to important new technologies, and a stronger ability to further penetrate our global markets. Most importantly, this is the right partnership for Pelco because our two companies share the same core values including an uncommonly strong commitment to our people, providing customers with extreme levels of service, and giving back to our communities. This exciting change opens the door for the next, dynamic new chapter in Pelco’s future. We are very pleased and optimistic.”

The transaction is expected to generate revenue and cost synergies estimated at $67 million on EBITDA in 2011. The price to be paid for Pelco is $1,220 million expressed as an enterprise value on a cash-free, debt-free basis. In addition, Schneider Electric will pay to the sellers the net present value of a tax benefit resulting from the step-up of Pelco’s assets, representing $320 million. The transaction is subject to anti-trust and other regulatory approval and is expected to close by October 2007.

Schneider Electric generated sales of approx. $18 billion in 2006 through more than 15,000 distributor outlets. Visitwww.schneider-electric.comfor more information.