(Bloomberg) -- Davidson Kempner Capital Management is building its stake in Aveva Group Plc and will join other investors in pushing Schneider Electric SE to up a £31 ($34.7) per share bid for the UK industrial software company, people familiar with the matter said.

The hedge fund, which now has a holding of 3.5% in Aveva, and others may seek an improved offer of up to £35 a share, the people said, asking not to be identified discussing confidential information. Davidson Kempner is continuing to add to its position, the people said. 

French industrial giant Schneider last month agreed to buy out minority shareholders in Aveva in a deal valuing the target at £9.5 billion. The offer has already been criticized as too low by the likes of M&G and Mawer Investment Management. Funds holding nearly 7% of Aveva now oppose the current terms, the people said. 

A vote on the takeover is expected in November and the deal will need the support of 75% of Aveva’s minority investors to succeed. Representatives for Aveva, Davidson Kempner and Schneider didn’t immediately provide comment. 

Aveva’s stock rose as much as 4.6% in London on Friday. The shares were trading around £31.86 late morning, indicating the market sees a higher bid from Schneider as likely. 

The current offer is a 41% premium to Aveva’s share price on Aug. 23, the day before Bloomberg News first reported on a possible bid. The target’s independent committee declared the terms “fair and reasonable” and plans to recommend the offer.

Schneider already owns about 59.1% of Aveva. Last year, it seconded executive committee member Peter Herweck to the UK group to replace Craig Hayman as chief executive officer.

Merger arbitrage hedge funds have found fewer opportunities to bet on deals this year as rising inflation and interest rates put the brakes on global M&A volumes. Among the pending transactions that have attracted their attention is Philip Morris International Inc.’s $16 billion offer for smokeless tobacco company Swedish Match AB, in which firms including Davidson Kempner have built stakes.

Read more: Arb Traders Share Their Fears for M&A

(Updates shares in fifth paragraph, CEO detail in seventh paragraph.)

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