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Schneider Electric hopes to win Aveva at the third attempt

11 September, 2017

Schneider Electric is taking a majority stake in the British industrial software developer Aveva and plans to merge it with its own software operation “to create a global leader in engineering and industrial software”. The deal follows the failure of two earlier attempts to merge the businesses over the past three years.

In the “reverse takeover” deal, Schneider is offering its software division to Cambridge-based Aveva in exchange for £1.7bn of shares in the combined organisation. Schneider will have a 60% stake in the business and will also pay £550m in cash to Aveva shareholders.

The failure of the first takeover attempt in 2015 was blamed on the “highly complex structure” of the proposed deal and “significant integration challenges”. A second attempt, in 2016, collapsed just two days after the talks became public.

Schneider has now almost completed a reorganisation its software operation which will make it a standalone business, and the company is confident that the transaction will go ahead this time. It believes that the deal will “enhance the value proposition” of its ExoStruxure IoT platform. Schneider CEO Jean-Pascal Tricoire says that the stabilisation of the oil, gas and mining markets since 2015 makes the deal even more strategic now.

Under the deal, Schneider cannot raise its shareholding above 60% for two years after the deal is completed, and above 75% in the 18 months after that.

One of Aveva’s strengths is 3D visualisation software

Schneider’s software business employs about 2,700 people and has revenues worth around $575m. Aveva, which was spun out of Cambridge University in 1967, employs more than 1,700 people. The combined business will have revenues worth around £657m and adjusted earnings this year of £146m.

The deal is expected to close by the end of this year.

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