Schneider Electric has agreed to buy enterprise software company PTC for $22.6 billion.

Nasdaq-listed PTC offers enterprise software solutions, such as software for product lifecycle management, computer-aided design, and application lifecycle management.

The deal is priced at $205 per share, 13 times earnings. Schneider’s share price dropped by nearly 10 percent today in response to the news.

Conversely, PTC’s premarket share price has risen by nearly 36 percent.

Schneider said the deal will create a “leading, scaled, open, and interoperable industrial software and AI franchise,” with high-quality recurring revenue supporting its “digital flywheel” ambition.

“The acquisition of PTC represents an important step forward in our ambition to lead the new era of energy and industrial intelligence,” Olivier Blum, CEO of Schneider Electric, said.

“Together, we are creating the industry’s most complete software & AI powerhouse and highest-quality portfolio bridging the physical and digital worlds. By connecting and contextualizing data across the lifecycle of products and assets, we will create a unique digital thread for the next generation of Industrial AI, helping customers to optimize their systems with greater intelligence from design and build to operate and maintain.”

The deal is Schneider’s biggest transaction to date. Earlier this year, the company announced an agreement to acquire industrial AI business Cognite for $3.1 billion.

Neil Barua, president and CEO of PTC, said: “Joining Schneider Electric is an incredible opportunity to elevate the scope and impact of what we deliver for our customers globally. We gain substantial scale and resources to accelerate innovation, advance our Intelligent Product Lifecycle vision, and expand our business into more geographies and end markets to serve more customers.”

In terms of financing, the total cash consideration is being secured through a fully committed bridge facility provided by Morgan Stanley and Société Générale. The deal expected to be funded via a combination of an equity issuance of approximately €5-6 billion ($5.6-7.1bn) and new debt issuance of approximately €16-17 billion ($17.9-19bn).

The deal is set to close by Q3 2027.