Schneider rekindles take-over talks with Aveva after share price rebound

Billy Bambrough
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If the deal goes ahead it would be considered a reverse takeover (Source: Getty)

French industrial group Schneider Electric has rekindled talks to acquire a majority stake in Cambridge-based engineering software developer Aveva.

It's thought the deal could be agreed by the end of the month.

It's Schneider's second attempt to strike a deal after talks between the two companies collapsed back in December last year. At the time Schneider said a merger would create "significant" challenges "that could not be overcome without considerable additional risk and cost".

Shares in Aveva were suspended after news of the renewed talks broke.

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News of the merger collapse in December sent Aveva’s share price down by over 30 per cent. Shares in the software developer fell as low as £12.37 in February but have now rebounded to where they were when Schneider kicked off talks last year – trading at £17.76 before suspension.

An industry source told City A.M. either the risk associated with the merger must have lessened or costs gone down, adding the deal was called off in December at the eleventh hour.

In a statement released this afternoon, Aveva said:

The proposed transaction, if consummated, would result in Schneider Electric owning a majority equity stake in the enlarged Aveva, which is intended to remain listed on the London Stock Exchange.

The board of Aveva is currently in preliminary discussions with Schneider Electric regarding the merits of such a transaction and its terms.

There can be no certainty that the discussions between Aveva and Schneider Electric will lead to any agreement concerning the possible combination or as to the timing or terms of any such agreement and there can be no assurance that, even if reached, any such agreement would be completed.

Last month Aveva's chief executive Richard Longdon said “lessons have been learned" from the aborted talks, after the firm recorded a sharp drop in yearly profits – down 46 per cent to £29.4m.

Longdon said the company is unlikely to attempt a similar deal.

“You never say never, but it's hard to see us trying to do a deal with such a high level of complexity again, though we are actively looking to make smaller scale acquisitions that will help grow our portfolio," he said.

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In November last year EDF Energy named Schneider Electric's UK and Ireland division as preferred bidder for a contract relating to the Hinkley Point C nuclear power station.

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