French industrial conglomerate Schneider Electric has agreed to buy 100% of Aveva, in a bid that values the British software developer at nearly £9.5bn, but has met with disappointment from some minority shareholders.
The French group said on Wednesday it would pay £31 per share in cash for the 40% of Aveva it did not already own – a 41% premium to the company’s late closing share price. August, before Schneider said he was considering an offer. He aims to complete the deal in the first quarter of 2023.
The takeover is one of the biggest UK acquisitions this year, but will leave the London stock market with just a handful of tech companies of all sizes. Late last month, Canada’s OpenText struck a £5.1 billion deal with British software developer Micro Focus International.
Aveva’s top 20 shareholder M&G, which owns 0.75% of the group, said it opposed the deal and would vote against it, adding it undervalued the company’s long-term potential. company.
“M&G is materially disappointed by Schneider Electric’s opportunistic £31 offer for the remainder of Aveva, and we are disappointed that Aveva’s board has recommended the offer to shareholders,” said Rory Alexander, UK equity fund manager.
He said Aveva’s share price “was trading at depressed levels due to a combination of low technology valuations, macroeconomic uncertainties and a complex evolution of the business model from licensing to revenue-based revenue.” subscriptions”.
Schneider’s offer was recommended to the minority shareholders of the British software company by a committee of Aveva directors deemed independent.
The deal is structured by a scheme of arrangement and will require the support of at least 75% of minority investors participating in a vote in November.
Born out of the University of Cambridge in the 1960s, Aveva is one of Britain’s oldest technology companies. Its software has mainly focused on the energy, infrastructure and manufacturing sectors – areas covered by Schneider as well – although it has expanded beyond that.
Shares of Cambridge-based Aveva closed 1.9% higher at £31.05 on Wednesday. Ahead of Schneider’s potential bid announcement, Aveva issued an earnings warning in which it flagged inflationary pressures and said growth would slow in 2022.
The British group has sought to diversify away from its core oil and gas customer base with the $5 billion acquisition of US rival OSIsoft last year.
Another of Aveva’s top 25 shareholders said he would accept the deal “with gritted teeth”, adding that it was representative of what he perceived to be a broader mispricing of UK shares.
“Realistically, it now all comes down to whether it’s a good enough price to persuade enough minority shareholders to support it,” Cowen analysts noted, adding that antitrust clearances were already in place.
Patrick Kennedy, the founder of OSIsoft and 4.5% shareholder of Aveva, did not return a request for comment. Kennedy was open to becoming an independent director on Aveva’s board after the acquisitions, the filings showed, though they did not detail his position on the offer.
The French company has owned 60% of Aveva since a £3 billion reverse takeover in 2017 that saw Schneider integrate its software assets into the British firm, which has retained a London listing.
The group said a full takeover would allow “faster execution of Schneider Electric’s software growth strategy.” Aveva will retain its Cambridge headquarters and a stand-alone team, he added.
Schneider President and CEO Jean-Pascal Tricoire told analysts on Wednesday that the company wants to “accelerate the path to providing our customers with a data hub.”
Schneider provides automation and software services, including systems to help companies improve the energy efficiency of buildings and factories.
Schneider also wants to help Aveva move to a subscription-based model and cooperate in areas such as research and development, Tricoire said.