Aveva unlikely to face Schneider reapproach in absence of board change
Schneider Electric [EPA:SU] would only reapproach Aveva [LON:AVV] if it underwent a board change, and is not expected to make a third attempt in the meantime after talks broke down last week, a source familiar with the situation said.
Schneider wants to add to its industrial software business and so is looking elsewhere for suitable targets, this source said.
The structure of the deal – which relies on Aveva purchasing assets including Invensys from Schneider – means it would be very difficult for Schneider to go hostile, the first source and a banker following the situation said. Schneider has not made attempts to talk directly with Aveva shareholders, a second source close to the situation said.
Aveva is very unlikely to engage with Schneider Electric again unless it substantially reduces the structural complexity of a deal, the first source, the banker and a person familiar with the situation said.
The parties have been in frequent contact since their first attempt to agree a reverse takeover ended in December, the two sources close to the deal said.
Schneider approached Aveva to discuss deal terms this month, but as the proposal was almost identical to the one made last year, Aveva very quickly decided against engagement, the first source and person said. Aveva is not looking to sell, the person added.
The July 2015 agreement would have seen Aveva acquire select Schneider industrial software assets, including Invensys. Schneider would have paid GBP 550m for new Aveva shares to own a 53.5% stake in the enlarged group.
Minor amendments were made in the renewed talks to take into account the parties’ financial performance since July, but the structure did not change, the first source said.
Aveva considered the risk in completing a complex two-step transaction as too high, the person and banker following the deal said. Aveva would also have had to shoulder a portion of the costs of integrating assets including Invensys, they said.
Aveva is not expected to face widespread calls to engage from shareholders, the banker following the situation said. One or two of the larger shareholders could apply pressure but there are no well-known activist investors with large holdings on its register at the moment, the banker noted.
Aveva declined to comment. Schneider did not respond to a request for comment.