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Aveva buyout: Will AVV shareholders force Schneider Electric to increase bid?

12:00, 23 September 2022

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A image of the Schneider Electric sign on its headquarters
The Schneider Electric deal may be scuppered due Aveva shareholders rejecting its bid - Photo: Shutterstock

Schneider Electric (SU) has confirmed it will move forward with a full takeover of software development group, Aveva (AVV) at $31 (£27.33) per share.

The French digital automation and energy management company, Schneider (SU) announced that the £9.4bn buyout of Cambridge-based Aveva, will mean that Schneider Electric will acquire around 40% of the shares it does not already own in the FTSE 100 (UK100) Group.

But will Aveva shareholders look to force Schneider Electric to increase its bid?

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Schneider Electric (SU) share price chart

Shareholders push for more

Schneider Electric already owns 60% of Aveva and it took majority control in 2017 in a takeover that allowed AVV to retain its London listing. Schneider paid £3bn at the time.

Schneider Electric's stock price has fallen 31% this year, whereas Aveva, which employees more than 6,400 people, saw its share price rise more than 2% on Wednesday, the day after the announcement was made.

But it seems that the deal may be scuppered.

A key investor in Aveva plans to reject Schneider Electric's takeover on the grounds that it represents an “opportunistic bid”, and that it undervalues Aveva.

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The FT reported that Peter Lampert, a portfolio manager at Mawer Investment, a Canadian group, which has C$77bn in assets under management and is one of the top five shareholders in Aveva, has expressed concern that the offer does not reflect the long-term potential of the company.

“Aveva is a great business with a promising outlook,” Lambert said in an interview with the FT.

Lambert is not the only shareholder to announce his concern over the deal. M&G Investments said on Wednesday it opposed the deal and would vote against it.

 

Aveva (AVV) share price chart 

But Schneider Electric (SUis determined to move forward with its plans and said Aveva offers a “unique proposition to combine energy and process data and software for benefit of customers. Committed to business autonomy and technological agnosticity through appropriate governance and incentive structures.”

Schneider Electric aims to close the deal at the start of 2023 and needs the support of 75% of Aveva shareholders. SU is unable to vote and therefore the deal hangs in the balance.

Further reading

What You Need to Know

The week ahead update on major market events in your inbox every week. Subscribe
The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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