French digital automation and energy management company Schneider Electric said it will go ahead with the full acquisition of Cambridge-based software company Aveva Group Plc in a deal that values the industrial software company at 9.48 billion pounds ($10.7 billion).
Schneider is making an offer of £31 (about $34.8) per share, about 41% over Aveva’s closing price on August 23, when Schneider first revealed its plans to explore a full takeover. Aveva’s stock price was at an all-time high that day.
Schneider expects the deal to expire in 2023.
Almost 60% of Aveva is already owned by Schneider. In 2017, Schneider completed a reverse acquisition that gave it majority control of Aveva and allowed the British company to keep its London listings. At the time, the French company paid £3 billion for the deal.
The latest deal means Schneider will acquire 40% of the remaining shares in the FTSE 100 Group.
Schneider Electric said Aveva’s software will remain “completely neutral” after the deal is completed, meaning it will work with or without Schneider Electric appliances and remain an independent company.
In addition, Aveva employees will not be integrated into the Schneider team.
The strategy, according to the French company, will preserve Aveva’s unique culture as a software company.
Schneider said gaining full control of Aveva will help expand the two companies by enabling Schneider to combine its energy proposal 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 in the acquisition of Osisoft, and I am confident Schneider Electric will continue to build on that legacy,” said Philip Aiken, Aveva Chairman. .
Born out of Cambridge University in the 1960s, Aveva is a FTSE 100 index company, with more than 6,400 employees. Its programs have primarily focused on the energy, manufacturing, and infrastructure sectors, although it has expanded further in recent years.
“We are proud of Aveva’s UK track record, one of Schneider Electric’s most important markets and strategy, and will maintain our headquarters in Cambridge, allowing us to continue to benefit from the region’s thriving technology community,” Jean-Pascal Tricoire, Schneider CEO, said.
According to Tricoire, Schneider also wants to work with Aveva to transition to a subscription and collaboration business model in areas such as research and development.
M&G, Aveva’s 20 largest shareholder and owner of 0.75% of the group, said it would vote against the merger because it devalues the company’s long-term potential.
Another of Aveva’s 25 largest shareholders said they would accept the purchase “with gritty teeth,” adding that it was an example of a large-scale devaluation of British stocks.
A group of Aveva directors, judged as independent, recommended Schneider’s offer to Aveva’s minority shareholders. To approve it, it will now need at least 75% of minority investors to support it in a vote held in November.
The announcement comes at a time when British tech companies are becoming attractive acquisition targets for foreign companies, as a result of the fall in sterling and Brexit valuations. He will leave the London Stock Exchange with very few big IT companies.
Canadian Open Text Corp. recently submitted a $5.1 billion bid to buy Micro Focus International, buy NortonLifeLock’s Avast, and U.S. private equity group Thoma Bravo recently made a bid to buy AI security firm Darktrace.
Other potential takeover candidates in the UK tech sector include Kape Technologies, The Sage Group, Redcentric and Words Studios.