France's Schneider Electric SE is in advanced talks to take control of British engineering software provider Aveva Group PLC, according to people familiar with the matter, after previous talks to merge their software operations collapsed over terms.
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The current deal calls for Schneider, a global industrial giant, to fold its software assets into Aveva's operations and pay the U.K. company more than GBP500 million ($646.4 million) in exchange for a controlling stake in the combined entity, in a so-called reverse takeover, according to the people familiar with the matter.
Aveva, with a current market value of about GBP1.2 billion, would maintain its stock listing on the London Stock Exchange and remain headquartered in Cambridge, the people said. A deal could be announced as soon as Tuesday.
Sky News first reported the planned tie-up.
The combination would create a larger industrial software provider, offering opportunity to cut costs, and access new customers by providing a broader range of products. Schneider has already targeted U.K. software companies in the past to bolster its industrial software business. In 2013, it agreed to acquire Invensys PLC for GBP3.31 billion to better compete against rivals such as Siemens AG, Mitsubishi Electric Corp. and Rockwell Automation Inc.
Spun out of Cambridge University in 1967, Aveva provides engineering software to owners, operators and engineering contractors that operate in the power, oil and gas, marine and paper and pulp sectors among others. It employs more than 1,700 people across 30 countries.
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The deal comes at a time when the company is trying to reduce it reliance on the slowing oil and gas and marine markets. For the year ended March 31, Aveva grew revenue by 7% to GBP215.8 million from the prior year, benefiting in part from currency moves. Discounting that, revenue was down 3.8%.
Schneider's software is used to help manage manufacturing processes, design tools and train plant crews. It services an array of industries ranging from transportation to food and beverages.
The planned transaction is similar to the structure of the companies' previous attempt to merge their industrial software businesses back in July 2015. Then Schneider had agreed to combine its software assets with those of Aveva and pay GBP550 million in exchange for a 53.5% stake in the enlarged group. However, the deal collapsed after the two sides couldn't agree on final terms.
Write to Ben Dummett at email@example.com and Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
September 04, 2017 18:03 ET (22:03 GMT)