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August 25, 2022

Schneider Electric mulls full purchase of engineering software giant Aveva

A takeover of one of the UK's biggest software companies would be a fresh blow to London's tech ambitions.

By Matthew Gooding

Aveva, one of the UK’s oldest tech companies, could be set to fall into foreign ownership after Schneider Electric revealed it is considering a full purchase of the engineering software business.

Aveva provides software tools for industrial settings. (Photo courtesy of LukaTDB/iStock)

France-based Schneider said yesterday it is considering purchasing the outstanding 40% of FTSE-listed Aveva’s shares. It has owned 60% of the company since 2017, when the businesses completed a complex £3bn reverse takeover.

Schneider Electric said in a statement “it is considering a possible offer for the entire issued, and to be issued, share capital of the company not currently owned by Schneider Electric. No proposal has been made to Aveva yet and there can be no certainty that any offer will be made”.

Under UK takeover, Schneider has until September 21 to make an offer for Aveva, which saw its share price climb 27% yesterday following the announcement.

What does Aveva do?

Aveva was spun out of the University of Cambridge in 1967 and has since built a reputation as one of the world’s biggest providers of industrial software, primarily for the oil and gas industries, providing systems which help businesses monitor, maintain and operate complex machinery.

In recent years it has diversified its business into other sectors and in 2020 it spent $5bn acquiring US-based OSIsoft, a provider of cloud-based industrial Internet of Things software.

It has a market cap of £8.4bn at the time of writing and posted revenue of £1.18bn in 2022, but earlier this year issued a profit warning for the 2023 financial year, stating that income would be lower than anticipated due to the war in Ukraine. Aveva had previously derived 2% of its income from the Russian market but pulled out after the conflict began.

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Its relationship with Schneider Electric got off to a rocky start with a merger between the companies first proposed, then cancelled, in 2015. After another aborted attempt in 2016, the businesses finally got together in 2017.

The reverse takeover structure was supposed to ensure that Aveva would continue to operate as an independent software business, and yesterday’s statement said that “whether or not an offer is made, Schneider Electric remains committed to Aveva, to its agnostic and autonomous business model and to its employees”.

Aveva sale to Schneider would be another blow to London’s tech ambitions

Any takeover by Schneider Electric would see Aveva delisted from the London Stock Exchange in what would be the latest blow to the government’s plans to make London a global tech hub post-Brexit.

Cyber defence company Avast is set to be delisted after it accepted a £7.1bn take-over offer from US rival NortonLifeLock, while, as reported by Tech Monitor, another cybersecurity vendor Darktrace is in talks with private equity fund Thomas Bravo about a buyout.

The government has also apparently failed in its efforts to convince SoftBank to relist Arm on the London Stock Exchange when it goes public again next year. Though SoftBank had explored a duel listing for the chip design giant, it has been reported it will list on the New York Stock Exchange instead, with executives citing the higher valuations available in the US, as well as the political turmoil in the UK, as reasons for this move.

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