Schneider Considers Buyout of $8 Billion Software Firm Aveva

Ruth David and Dinesh Nair, Bloomberg News

(Bloomberg) -- Schneider Electric SE said it’s considering a bid to buy out minority shareholders of industrial software developer Aveva Group Plc.

The French industrial conglomerate believes a full combination with Aveva would help it execute its growth strategy faster, it said in a statement Wednesday that confirmed an earlier Bloomberg News report. It already owns about 60% of London-listed Aveva.

Aveva said in a separate statement that it hasn’t yet received any approach. Under UK takeover rules, Schneider has until 5 p.m. on Sept. 21 to make a bid.

Shares of Aveva jumped as much as 39% in London trading Wednesday, a record intraday gain. They were up 28% at 2:51 p.m., giving the company a market value of about £8.5 billion ($10 billion). Aveva had lost nearly half its value in the 12 months through Tuesday.

Any transaction would mark the second big cross-border deal between France and the UK in recent months. Paris-listed Eutelsat Communications SA agreed in July to combine with OneWeb Ltd. in a deal valuing the UK government-backed satellite operator at $3.4 billion.

Analysts at Jefferies Financial Group Inc. wrote in a research report Wednesday that the deal “makes sense,” especially as most of Aveva’s top managers came from Schneider. Omid Vaziri, an analyst at Bloomberg Intelligence, wrote that any buyout could bring “synergistic benefits to both sales and costs” and potentially boost valuations while reducing Schneider’s capital intensity.

Schneider is working with Citigroup Inc., while Aveva is being advised by Lazard Ltd., JPMorgan Chase & Co. and Numis Corp., according to Wednesday’s filings.

Chief Executive Officer Jean-Pascal Tricoire has been offloading Schneider’s non-core businesses and channeling more investment into areas that help companies with the shift to digitalization. Cambridge, England-based Aveva provides software tools for utilities, oil and gas producers, transportation firms and other companies, according to its website.

Schneider took control of Aveva after agreeing in 2017 to combine its own industrial software business with the British company. Aveva has since bulked up further through acquisitions, buying SoftBank Group Corp.-backed industrial software maker Osisoft in 2020 at a valuation of $5 billion including debt.

Aveva’s original deal with Schneider prevented the French company from boosting its stake for two years after the transaction closed, and capped its holding below 75% for a further 18 months unless certain conditions were fulfilled.

(Updates with dealmaking background, analyst quotes from fifth paragraph)