by Sudip Kar-Gupta and Supantha Mukherjee
PARIS (Reuters) – French group Schneider Electric said on Wednesday it was considering an offer for the roughly 41% stake in Aveva it does not yet hold, sending shares of the British industrial software supplier jumping.
“No proposal has yet been submitted to Aveva,” said Schneider in a statement, stressing that there is at this stage no certainty that an offer will actually be made or on the possible terms.
The French group adds that, under British mergers and acquisitions legislation, it will have to say whether or not it intends to submit an offer by September 21 at 4:00 p.m. GMT at the latest.
On the London Stock Exchange, the Aveva title, in which Schneider already owns nearly 60% of the capital, gained nearly 25% around 2:40 p.m. GMT while Schneider for its part took 0.98% in Paris.
The British group announced that it had not been approached but that if such a proposal were submitted to it, an independent committee of the board of directors would evaluate it with its advisers. In the meantime, Aveva urges its shareholders to do nothing.
Products developed by Aveva are used to design and manage oil rigs, ships and chemical plants while the French conglomerate’s activities cover electrical components, energy management and industrial automation systems.
“Schneider Electric believes that a comprehensive combination of Aveva and Schneider Electric’s software business will strengthen Aveva and enable it to execute its growth strategy more quickly,” the French industrial group said. “Whether or not an offer is made, Schneider Electric remains committed to Aviva, its agnostic and autonomous business model and its employees.”
Schneider Electric announced in 2017 an agreement for the merger of its industrial software activities with the British group, an operation allowing it to hold 60% of the capital of the new entity formed. He had then paid three billion pounds sterling.
The Aveva share price has since doubled, which could lead the French company to pay a higher amount for the remaining shares.
“In 2017, Schneider didn’t want to disrupt Aviva’s culture, allowing the business to continue with some independence, while taking advantage of overlapping end markets,” Denise Molina told Morningstar.
“Today Aviva is more integrated, has been working with Schneider’s software business for a few years and its current managing director, Peter Herweck, comes from Schneider. So the risk of disruption with a full takeover is not as much of a problem,” the analyst added.
(Report Sudip Kar-Gupta, Paul Sandle, Julien Ponthus, written by Ingrid Melander, French version Myriam Rivet, Marc Angrand and Laetitia Volga, edited by Matthieu Protard, Jean-Michel Bélot and Kate Entringer)