At the third time of asking, software group AVEVA and French business Schneider Electric have agreed a deal that will create a technology powerhouse in Cambridge worth around £3 billion employing some 3,500 people.
AVEVA is to merge with the software arm of the French energy group but the deal will be treated as a reverse takeover even though Schneider is acquiring a majority stake (60 per cent) in the Cambridge business. AVEVA will remain headquartered in Cambridge and stay listed on the UK stockmarket.
With interim CEO James Kidd (pictured) set to step down from the head role, the appointment of a new chief executive will be absolutely key to the successful integration of the businesses. Kidd will continue as an executive.
The deal collapsed twice because the boards failed to agree terms but AVEVA’s former CEO, Richard Longdon, who stood down at the end of last year, has always maintained that it would be transformational for the business and sensational for Cambridge – creating the cluster’s biggest hitter in terms of market cap, even ahead of ARM.
The deal creates a global leader in engineering and industrial software with an unmatched breadth of product offering.
Some £550 million of cash is being contributed by Schneider Electric and £100m of excess cash on AVEVA’s balance sheet will be distributed to existing AVEVA shareholders at or around completion – expected by the end of 2017.
The Schneider Electric software business has a global footprint spanning North America, Europe, the Middle East, Asia Pacific and Latin America with approximately 2,700 employees worldwide (including some 158 temporary employees and contractors).
It has eight global research & development centres and 25 project execution centres. In the financial year to March 31, it generated revenues of $575.1m.
The merger will also position the enlarged AVEVA Group as a strong player able to take advantage of future acquisitional opportunities.
AVEVA’s existing non-executive directors will remain in place on completion. Philip Aiken will continue as non-executive chairman and Jennifer Allerton, Christopher Humphrey and Ron Mobed will carry on as independent NEDs of the enlarged AVEVA Group.
The parties are in the process of selecting a new CEO and pledge an announcement as soon as possible. James Kidd will continue in the meantime and when a new CEO is appointed will become deputy chief executive and chief financial officer.
AVEVA chairman Philip Aiken said: “The transaction will be transformational to AVEVA, creating a global leader in industrial software, which will be able to better compete on a global scale.
“AVEVA will significantly expand its scale and product portfolio, increase its capabilities in the owner operator market, diversify its end user markets and increase its geographic exposure to the North American market, in line with our strategic goals.
“The transaction is expected to provide significant value to our shareholders via the upfront cash payment and a significant ongoing holding in the enlarged AVEVA Group, which will benefit from synergies and a compelling equity story underpinned by an enhanced strategic positioning.”