Schneider Electric is considering the acquisition of Aveva, a British industrial software provider. The announcement caused Aveva’s share price to soar by 32 percent.
Schneider Electric currently holds a majority stake in Aveva. The organization is considering a buyout of the remaining shareholders. Schneider Electric will decide on the deal by September 21.
Schneider and Aveva
Schneider Electric develops products for energy management. The technology is used in a variety of environments, from homes and offices to national power grids. Aveva develops industrial software for engineers, managers and IT professionals in the manufacturing industry.
“No proposal has been made to Aveva yet and there can be no certainty that any offer will be made, nor as to the terms on which any offer will be made (should one be made)”, Schneider Electric said in a statement. Aveva’s share price jumped 32 percent following the announcement. Its market value rose to roughly €10 billion.
The long game
Schneider has been a major shareholder in Aveva since 2017. The organization paid £3 billion at the time. Aveva’s share price has doubled since then. Schneider Electric would have paid a lot less for a full acquisition in 2017 than it may now.
According to Denise Molina, market analyst at Morningstar, Schneider deliberately waited. “At the time of the acquisition, Schneider didn’t want to disrupt the culture of Aveva, enabling the company to carry on with some independence, while still taking advantage of overlap in customer end markets”, Molina told Reuters.
Fast forward to now, and Aveva has several years with Schneider under its belt. Peter Herweck, Aveva’s current CEO, previously worked for Schneider’s management. “The risk of disruption through full ownership is not as much of an issue”, Molina added.
Schneider stressed that Aveva would retain independence in the event of a full acquisition. Aveva formally responded. “Any such proposal, if and when received, would be evaluated by an independent committee of the board of Aveva, together with its advisers.”