French digital automation and energy management company Schneider Electric says it will advance a full takeover of Cambridge-based software company Aveva Group Plc in a deal that will price the industrial software maker about £9.48 billion ($10.7 billion). billion $).
Schneider is offering £31 (about $34.8) per share, a roughly 41% premium to Aveva’s closing price on Aug. 23, when Schneider first announced plans to explore a full takeover. Aveva’s share price hit its all-time high that day.
Schneider expects the deal to close in 2023.
Almost 60% of Aveva is already owned by Schneider. In 2017, Schneider completed a reverse takeover that gave him majority control of Aveva and allowed the British company to retain its London listing. At the time, the French company paid £3 billion for the transaction.
The latest deal means Schneider will acquire the remaining 40% stake in the FTSE 100 Group.
Post-closing, Aveva software will remain “completely agnostic,” meaning it will work with or without Schneider Electric hardware and remain an independent company, Schneider Electric said.
Also, Aveva employees will not join the Schneider team.
The strategy will preserve Aveva’s unique culture as a software company, according to the French company.
Schneider said that gaining full control of Aveva will support the expansion of the two businesses by giving Schneider the ability to combine its own energy offering with Aveva’s process data and tools.
“Schneider Electric has been a supportive shareholder and partner in Aveva’s strategic development since 2018, most recently with the acquisition of Osisoft, and I am confident that Schneider Electric will continue to build on that legacy,” said Philip Aiken, Chairman of Aveva.
Aveva spun off from Cambridge University in the 1960s and is a FTSE 100 company with over 6,400 employees. Its software has primarily focused on the energy, manufacturing, and infrastructure sectors, although it has expanded beyond those in recent years.
“We are proud of Aveva’s track record in the UK, one of Schneider Electric’s most important and strategic markets, and will retain our headquarters in Cambridge so that we can continue to benefit from the region’s thriving technology community,” said Jean-Pascal Tricoire , CEO of Schneider, said.
According to Tricoire, Schneider also wants to work with Aveva to move to a subscription-based business model and collaborate in areas like research and development.
M&G, a top 20 Aveva shareholder and owner of 0.75% of the group, said it will vote against the merger because it underestimated the company’s long-term potential.
Another of Aveva’s top 25 shareholders said he would accept the purchase “with clenched teeth”, adding that it was an example of a more widespread undervaluation of UK shares.
A group of Aveva directors, deemed to be independent, has recommended Schneider’s offer to Aveva’s minority shareholders. Approval now requires at least 75% of minority shareholders to support them in a November vote.
British technology companies are attractive acquisition targets
The announcement comes at a time when the low pound and falling valuations caused by Brexit have made UK tech companies attractive takeover targets for foreign companies. It will exit the London Stock Exchange with very few large IT companies.
Canada’s Open Text Corp recently made a $5.1 billion bid for Micro Focus International, NortonLifeLock is buying Avast and US private equity group Thoma Bravo recently made a takeover bid for AI security firm Darktrace.
Other potential takeover targets in the UK tech sector include Kape Technologies, The Sage Group, Redcentric and Keywords Studios.