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Aveva, the UK engineering software developer, is set to be acquired by French industrial groups Schneider Electric in a multi-step reverse takeover that will mark the third attempt at a combination between the two companies since 2015. Under the terms of the deal, Schneider Electric will contribute its own software division to Aveva in exchange for new shares in the UK company. Schneider will emerge with a majority of the enlarged company’s stock as a result, according to people close to the matter. The French company will also pay around 800p a share, or more than £500m in cash, to Aveva shareholders to compensate them for giving up control, these people said. The combined company will retain Aveva’s UK listing. The deal, which was reported earlier by Sky News, is likely to be announced as soon as Tuesday. Aveva supplies software to the oil and gas, mining, and paper and pulp industries. But its business has come under pressure as customers spending in response to low commodity prices. Schneider’s software division assets that previously formed part of Invensys, the UK engineering group that Schneider Electric bought in 2013 for £3.4bn. A combination will allow for significant cost cutting. The first attempt at a combination between the companies collapsed in December 2015, six months after an initial agreement due “integration challenges…that could not be overcome without considerable additional risk and cost”. At the time, Aveva’s then-chief executive Richard Longdon said that: “The sad thing is the industrial logic was always good and still is. But they say that time kills deals. Too much time had gone on.”Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email [email protected] to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
Schneider then made a fresh approach for Aveva in June 2016, but those talks collapsed just after two days. Mr Longdon, who joined Aveva more than three decades ago and had led the company for 17 years, was replaced by James Kidd, Aveva’s chief financial officer, at the start of 2017. Shares in Aveva fell 1 per cent on Monday to £19.19, giving the company a market value of £1.24bn. Its shares are up just 2 per cent on the year compared with the FTSE-250 which is up 9 per cent. Schneider Electric’s stock price has risen four per cent since the start of the year and the company has a market value of €41.1bn. Earlier this year, the company reported that revenues in the full year to March rose 7 per cent to £215.8m. But when the impact of currency movements was removed, revenues were 3.8 per cent lower.