20th Jul 2015 08:30
LONDON (Alliance News) - FTSE 250 engineering software company AVEVA Group PLC on Monday said it has struck a deal with French energy group Schneider Electric SE to acquire industrial software assets from Schneider in a GBP1.3 billion reverse takeover.
Under the terms of the deal, AVEVA will acquire Schneider Software on a debt-free, cash-free basis and will receive GBP550 million in cash from Schneider Electric for AVEVA shares, giving Schneider a 53.5% stake in AVEVA. AVEVA said that based on its share price before the market open - shares in the company closed at 1,770 pence last Friday - around 74.0 million shares will be issued to Schneider Electric having a market value of around GBP1.3 billion.
Shares in the company soared following the announcement and were up 28% at 2,271.00 pence Monday morning, comfortably the best performer on the FTSE 250 and the highest price the stock has seen since June last year.
Schneider Software's product portfolio offers solutions in process engineering, operations planning, and information management, amongst other services.
The GBP550 million in cash from Schneider will be distributed to AVEVA shareholders, equivalent to GBP8.55 per AVEVA share, and AVEVA shareholders will have a 46.5% stake in the enlarged company. Additionally, the company said that AVEVA shareholders also willreceive any net excess cash held on AVEVA's balance sheet.
The enlarged company will continue to be listed on the London Stock Exchange's main market. Additionally AVEVA's existing board of directors will remain in place, and two additional non-executive directors proposed by Schneider Electric will be appointed upon completion.
The two companies said there is "clear and compelling industrial logic and strategic rationale" for a combination, and estimate they will create a company with combined revenues of around GBP534 million and adjusted earnings before, interest, tax and amortisation of around GBP130 million.
For the year to end-March AVEVA posted revenue of GBP208.7 million, down from GBP237.3 million the year before, hit by falling demand in the oil and gas industry.
The companies said the reverse takeover will diversify AVEVA's end markets, adding verticals including chemicals, food and beverage, mining, water and waste water and pharmaceuticals to its existing positions in oil and gas, power and marine. Additionally, AVEVA will benefit from Schneider's exposure to the Americas, which is expected to contribute to around 36% of revenues for the enlarged company, compared to 18% of AVEVA's current revenues.
"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. Through the acquisition of Schneider Software, AVEVA will significantly expand its scale and product portfolio, diversify its end user markets and increase its geographic exposure to the US market, in line with our strategic goals," said AVEVA Chief Executive Richard Longdon.
AVEVA had been speculated as an acquisition target for international suitors in the past, with the Sunday Times reporting in May that Schneider was likely to target the company, as well as US conglomerate General Electric Co and US based manufacturer Emerson Electric co.
By Sam Unsted; [email protected]; @SamUAtAlliance and Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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