Schneider Electric SE, Rueil Malmaison, France, and Aveva Group Plc, Cambridge, UK, announced they’ve agreed to join forces to create a more comprehensive software offering for the industrial market. Under terms of the deal, Aveva will take ownership of certain parts of Schneider’s industrial software product lines and Schneider will buy a controlling stake (53.5%) in the enlarged Aveva for approximately $858 million. The agreement is at this point non-binding and subject to the usual shareholder and regulatory approvals.
The deal, the companies said in a joint release, will establish Aveva Group as a global player in industrial software with scale and experience in key infrastructure and process industry markets including oil & gas, power, marine, chemicals, food and beverage, mining, water and wastewater and pharmaceuticals. The combined business will be able to offer a portfolio of asset management solutions ranging from design & build to operations along the full asset life cycle. The companies said they also see potential for material revenue and costs synergies based on complementary end-market exposures, customer bases and product portfolios. Schneider Electric and Aveva also will enter into a collaboration agreement in connection with R&D and commercial activities.
Aveva’s software is used in more than 3,000 major global engineering projects, ranging from data management at the Paks Nuclear Plant in Hungary to 3D modeling of new diesel machines for German truck manufacturer MAN SE.
The enlarged Aveva would have combined revenues of roughly £534 million (about $833 million) and adjusted EBITA of £130 million (about $203 million). The companies expect the enlarged Aveva Group will continue to trade on the London Stock Exchange.
The $858 million Schneider Electric would pay Aveva Group under terms of the deal would be distributed to Aveva shareholders (excluding Schneider) in exchange for the issuance of new Aveva shares, giving Schneider Electric a majority stake in Aveva of 53.5% on a fully-diluted basis. Schneider Electric would then fully consolidate the business in its Group financials.
The existing board of directors and management of Aveva will remain in place on completion, including Philip Aiken, chairman; Richard Longdon, CEO; and James Kidd, CFO, in order to drive the strategy, implementation and integration of Schneider Software. A new COO will be appointed from Schneider Software but will not serve on the board, and Schneider also will propose two additional non-executive directors for appointment.
Schneider invested over $5 billion to acquire another British industrial software firm, Invensys, in 2013, which brought it the Wonderware industrial software platform (along with Foxboro controls and Eurotherm and Robertshaw temperature sensors) and dramatically expanded its reach on the plant floor. Schneider’s software now has a global footprint spanning North America, Europe, the Middle-East, Asia-Pacific and Latin America with about 2,000 employees worldwide in eight global R&D centers and 23 “project execution” centers. Schneider Software’s market reach is further extended through an ecosystem of partnerships and alliances, including over 160 product technology partners, over 3,500 certified developers and global project delivery alliances to enhance execution capabilities in key vertical and geographical markets. In the year ended March 31, 2015, approximately 40% of the software group’s revenues came from North America, 29% from EMEA, 19% from Asia Pacific, 8% from Latin America, and 5% from other markets.
