The energy management specialist is spending 4.76 billion euros to go up to 100% in Aveva.
For Schneider Electric, the future is software. The group announces the launch of a takeover bid on the capital of the British software publisher Aveva. This is a somewhat special operation, because the French energy management giant is already a 59% shareholder in Aveva. Schneider invests a lot of money in this operation. The proposed price will be 3100 pence per share, which is 41% higher than the closing price on August 23, the day before the first rumors evoking this eventuality.
In total, the French group will spend around 4.76 billion euros to increase to 100% in what is already its subsidiary, which achieves 1.3 billion in turnover and 389 million pounds in operating profit. . The valuation of 100% of the capital represents 8.2 times the turnover and 27.8 times the operating profit of Aveva. Huge multipliers. But Jean-Pascal Tricoire, the CEO of Schneider, believes that the British group is well worth it.
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Aveva’s activities perfectly complement those of Schneider. The French group has internally developed a set of software adapted to energy management in buildings and factories, ranging from design and construction, to operation and maintenance. Aveva develops industrial process optimization software, going as far as creating a digital twin. For all of its software activities, the group highlights its “agnostic” offer, i.e. “based on open architectures and interoperable standards offering the same ability to operate with or without Schneider equipment”, according to the company. Today, software accounts for 40% of the French group’s turnover (nearly 29 billion last year).
Autonomous entity
The combination of the two branches will create “an unparalleled enterprise data hub”, according to the group. However, Aveva will continue to exist as an independent entity. There will be no integration with existing Schneider activities.
The British company will retain real operational autonomy with its name, sales, marketing and R&D capabilities. To ensure adherence to these principles, Aveva will remain a separate legal entity with its own board of directors, including independent directors. This will not prevent commercial synergies. Above all, the software market is now moving towards Saas (software as a service), where software is installed on remote servers and not directly at the customer. This change will be made easier by this total takeover.
Schneider had acquired its 59% stake in Aveva in 2018, contributing assets and paying 600 million euros. Its stake was then valued at around 1.6 billion euros. Based on the price offered for the balance, it now reaches 6.8 billion euros, which represents a multiplication by more than four in five years! An increase in value which explains the amount invested by the French group to buy 100% of its subsidiary.
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