Sunday, September 25

Schneider to Buy Aveva in £9.5 Billion Industrial Software Deal


Schneider Electric SE agreed to buy out minority shareholders in Aveva Group Plc in a deal that values ​​the UK industrial software company at £9.5 billion ($10.8 billion), the latest foreign takeover of British tech company.

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(Bloomberg) — Schneider Electric SE agreed to buy out minority shareholders in Aveva Group Plc in a deal that values ​​the UK industrial software company at £9.5 billion ($10.8 billion), the latest foreign takeover of British tech company.

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Schneider will pay £31 per share, the company said in a statement on Wednesday, confirming an earlier Bloomberg News report. Under the terms of the deal, the company, which already owns 59.14% of Cambridge, England-based Aveva, will pay about £3.87 billion for the remaining equity.

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Read More: Schneider Is Said to Near £9.4 Billion Aveva Buyout Deal

Schneider Chief Executive Officer Jean-Pascal Tricoire, 59, will gain full control of an asset he’s coveted since at least 2015, when the company made its first failed attempt to buy Aveva. Control of Aveva will help Schneider accelerate plans to move the power plants and factories its customers own onto more digital services, selling software that reduces energy use and increases efficiency.

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Aveva becomes the latest of a number of UK tech firms to be taken over by a foreign acquirer and delisted from the London Stock Exchange, a trend that’s raised concern in the government.

The French industrial giant initially took control of Aveva in a deal announced in 2017, getting a majority stake in the company in exchange for its software unit and a cash payment. At the time, peers including Siemens AG and General Electric Co. were also investing in their own software businesses, products that would help customers automate, design and optimize power plants and factories.

Read More: Aveva Gains on Schneider Bid, Room for Improvement: Street Wrap

Aveva — which provides software tools for utilities, oil and gas producers, transportation firms and other companies — said in the statement that its revenue has declined in the first five months of this fiscal year “by a mid-single digit rate” compared to a year earlier and costs “have increased significantly.”

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“While Schneider has majority ownership already and did appoint the current CEO, Aveva performance has been slightly inconsistent and Schneider management may see benefits from total control especially in terms of strategy alignment and speed of action,” RBC Capital Markets analyst Mark Fielding said in a note to investors on Wednesday.

The share price is a more than 40% premium to Aveva’s trading price on Aug. 23, the last full trading day before Bloomberg News first reported the potential bid. The deal, which is expected to close in the first quarter, gives Aveva an enterprise value of £10.2 billion.

Schneider shares fell 0.9% to 115.02 euros at 9:52 am in Paris trading. The stock has declined 33% this year. Aveva rose 2.3% to £31.17 in London, just above the offer price.

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Aveva will be able to keep its headquarters in Cambridge and Schneider doesn’t plan to make “any material change” to the number of Aveva employees, Schneider said in the statement.

Still, the takeover will make Aveva the latest UK tech company to be taken over by a foreign bidder. The UK government is increasingly pushing back on these deals, which have claimed some of the country’s biggest tech businesses in the last decade.

Cambridge-based Arm, which designs semiconductors for everything from smartphones to supercomputers, was acquired by SoftBank Group Corp. in 2016 and is now planning a public offering in the US. Prime Minister Liz Truss is lobbying the Japanese investor to list in the UK, the Financial Times said this month.

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Welsh chipmaker Newport Wafer Fab’s sale to a Chinese-owned company is being probed by the UK government, which is leaning toward restricting or blocking the takeover more than a year after it was signed, people familiar with the matter had said.

EXPLAINER: Why Arm is Headed for an IPO After Failed Nvidia Deal

Schneider and Aveva had been in on-again, off-again talks about a combination since at least 2015, when they reached an initial agreement. Those talks fell apart within months because of concerns about the complexity of the French company’s business and integration costs. Another round of talks ended in 2016 two days after becoming public.

Aveva has since bought SoftBank-backed industrial software maker Osisoft in 2020 at a valuation of $5 billion including debt.

Schneider worked with Citigroup Inc. while Aveva’s lead financial adviser was Lazard Ltd. and joint financial advisers and brokers were JPMorgan Chase & Co. and Numis Corp.

The deal must still be approved by shareholders in a meeting that’s anticipated to take place in mid-November, and will require regulatory approvals.

(Updates with analyst comment in sixth paragraph)

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