Why Legrand is betting $1.125bn on Avtron Power Solutions to boost its data center and energy business

Legrand S.A. (ENXTPA: LR), the French multinational specializing in electrical and digital building infrastructure, has signed a definitive agreement to acquire Avtron Power Solutions, a global provider of load banks and power quality systems, in a deal valued at approximately 1.125 billion dollars. The acquisition marks one of the largest transactions in Legrand’s history and underscores the company’s intent to expand further into the critical power infrastructure space, particularly in North America and Europe.

Avtron Power Solutions is projected to generate close to 350 million dollars in revenue in 2025, with strong margins and consistent profitability expected to make it a highly accretive addition to Legrand’s portfolio. Once the deal closes following regulatory approvals, Avtron will operate as a stand-alone business unit under Legrand’s Electrical Wiring Systems Division. Its leadership team, including its current chief executive, will continue managing the business, ensuring continuity during the integration process.

The agreement reinforces Legrand’s strategy of building capabilities in mission-critical power infrastructure, a sector increasingly vital to the energy transition, digitalization, and industrial automation. The deal is aligned with the company’s Ambition 2030 roadmap, which prioritizes investments in datacenters, energy resilience, and low-carbon infrastructure solutions.

Why is Legrand investing more than $1 billion to buy Avtron Power Solutions?

Legrand has historically built its business on wiring devices, switches, and electrical components, but in recent years has pivoted toward high-growth verticals such as datacenters, digital infrastructure, and electric mobility. Avtron Power Solutions specializes in load banks and power quality solutions that are essential for testing and validating power systems, ensuring uninterruptible power supply performance, and maintaining reliability in critical facilities such as datacenters, healthcare systems, utilities, and renewable energy installations.

With more than 70 percent of Avtron’s sales originating from the United States, the acquisition immediately strengthens Legrand’s presence in North America. This is a market where demand for resilient power infrastructure has surged with the rise of hyperscale datacenters, the rapid adoption of artificial intelligence, and grid modernization initiatives. Avtron’s five manufacturing facilities spread across North America and Europe also provide Legrand with localized production capacity, reducing supply chain vulnerabilities and improving responsiveness to customer demand.

The move is strategically timed as global demand for datacenter capacity accelerates. In its most recent earnings reports, Legrand highlighted that datacenter-related sales accounted for nearly a quarter of its revenue, reflecting the growing importance of this sector to its growth story. Avtron’s specialization in power quality testing equipment will allow Legrand to deepen its reach in this market by offering end-to-end solutions for power reliability and infrastructure resilience.

How did markets and analysts react to Legrand’s billion-dollar acquisition?

Following the announcement, shares of Legrand climbed to a record high, touching 145.45 euros before settling near 142.75 euros. The stock is now trading near the top end of its 52-week range, which has spanned from roughly 83 euros to 145 euros. Investor sentiment suggests optimism that the acquisition strengthens Legrand’s positioning as a key enabler of the energy transition and the AI-driven data infrastructure boom.

However, some analysts have expressed caution. Brokerages such as Kepler Cheuvreux recently downgraded the stock to Hold from Buy, citing concerns that much of the datacenter-driven upside is already priced into valuations. The 1.125 billion dollar price tag reflects a significant premium, and there is skepticism about whether synergies will justify the acquisition multiple.

Institutional flows in recent sessions indicate a cautiously bullish posture. Long-only funds and European infrastructure investors appear supportive of the move, though some hedging is evident as portfolios balance enthusiasm with valuation risks. Retail sentiment is notably strong, with the stock benefiting from momentum trades tied to infrastructure and energy transition themes.

Legrand’s fundamentals provide a degree of comfort to investors. In its February 2025 earnings release, the company posted organic growth of 6 to 10 percent, with data center revenues hitting 1.6 billion euros. The resilience of its financials, despite softness in construction and housing markets, suggests the company is successfully shifting its earnings base toward more resilient sectors.

What risks and integration challenges could Legrand face with Avtron?

While the acquisition offers significant strategic benefits, challenges remain. Integration of a specialized engineering company like Avtron requires maintaining its technical culture and customer relationships while aligning processes and systems with Legrand’s global operations. Any disruption in product quality, delivery, or innovation cycles could impact Avtron’s credibility in mission-critical markets.

Regulatory approvals in the United States and Europe could delay the closing, and antitrust authorities may scrutinize the transaction given Avtron’s share in the load bank sector. Moreover, valuation risks loom large. Legrand must demonstrate that the premium paid translates into higher margins and cash flows.

Competitive intensity is another concern. Companies such as Schneider Electric, ABB, and niche manufacturers in the critical power space are actively vying for datacenter and industrial contracts. To stay ahead, Legrand will need to invest in R&D, digital monitoring solutions, and advanced power quality technologies to integrate Avtron’s offerings into its broader product portfolio.

Macroeconomic headwinds could also influence the outcome. Rising interest rates, commodity cost volatility, and potential supply chain disruptions all pose risks to execution. Nevertheless, the diversification benefits of owning Avtron’s business make the transaction attractive as a long-term hedge against cyclical downturns in construction.

How does the Avtron deal fit into Legrand’s long-term transformation strategy?

Legrand has a history of targeted acquisitions that expand its technological base and geographic reach. From its roots in 19th-century France as a wiring device maker, the company has grown into a multinational platform with strengths in building electrification, automation, digital infrastructure, and energy management. Previous acquisitions have included moves into EV charging networks, smart home automation, and structured cabling.

The acquisition of Avtron is consistent with this pattern, but it is also larger and more transformational in scale. It positions Legrand firmly within the critical power ecosystem at a time when datacenters, renewable integration, and electrification are reshaping global energy markets. Industry observers believe this deal could set off a new wave of consolidation in the sector, with competitors likely to respond by acquiring niche players in power quality or backup systems.

This pivot also reflects the broader trend among European industrials such as Siemens, ABB, and Schneider Electric, which have reoriented themselves toward data-driven infrastructure markets. Investor interest in these companies has surged in parallel with AI adoption and energy transition commitments, boosting their collective market value by more than 150 billion euros over the past five years.

What should investors and industry observers watch in the months ahead?

The next steps for Legrand will revolve around regulatory approvals and the integration of Avtron as a stand-alone business. Analysts will watch closely for signs of revenue synergies, such as cross-selling Avtron’s solutions to Legrand’s data center customers, and cost savings from localized manufacturing. Margin expansion in Avtron’s business will be a key benchmark to determine whether the acquisition delivers on its promises.

Long-term, the acquisition may redefine Legrand’s role in the global energy transition. By moving up the value chain from building electrification to mission-critical power quality systems, the company is diversifying its revenue streams and solidifying its relevance in high-growth markets. If executed well, this acquisition could be remembered as a turning point that transformed Legrand into not just a supplier of building systems, but a global power infrastructure leader.

For investors, Legrand remains a stock to watch. While valuation may be stretched in the near term, its strong fundamentals, focus on data centers, and commitment to sustainability make it attractive for long-horizon portfolios. Institutional positioning suggests cautious optimism, while retail enthusiasm reflects broader confidence in infrastructure as a growth theme.

Legrand’s decision to buy Avtron Power Solutions represents more than an expansion of product lines. It reflects a strategic reshaping of the company toward the heart of the energy transition, where datacenters, industrial automation, and renewable energy convergence are redefining power infrastructure. For Legrand, this 1.125 billion dollar acquisition could become one of the most significant milestones in its modern history, and for investors it offers a window into how traditional electrical companies are reinventing themselves in the digital and sustainable era.