French swoop on Aveva hanging in the balance: Schneider Electric deal would be hammer blow for UK, says top investor
The French takeover of one of Britain’s biggest technology firms is on a knife edge as opposition from shareholders mounts.
Paris-based Schneider Electric – which already owns 59 per cent of FTSE 100 listed Aveva – plans to buy the remaining 41 per cent for 3225p per share in a deal that values the Cambridge-based software firm at £10billion.
But the takeover hangs in the balance as it requires the approval of at least 75 per cent of minority shareholders at a key vote on Friday.
Target: Schneider Electric – which already owns 59% of Aveva – plans to buy the remaining 41% for 3225p per share in a deal that values the Cambridge-based software firm at £10bn
Given the French group cannot vote, it would only take 10 per cent of the overall shareholder base to reject it for the deal to be blocked.
And there are growing signs that opposition to the proposals could scupper Schneider’s swoop on one of Britain’s oldest technology companies.
City heavyweight Jupiter – a top 40 shareholder in Aveva – became the latest to speak out, warning the deal would be a hammer blow for London as the UK looks to turn itself into the Silicon Valley of Europe.
Another top 20 investor, which did not want to be named, said: ‘We believe that the current bid from Schneider Electric for Aveva materially understates the true long-term value of the business.
‘We are concerned that the approach appears highly opportunistic at a time of business model evolution and follows a difficult period of share price performance.
‘Aveva is a leading UK software company, which in our view, will play a significant role in accelerating climate transition, as a green solutions enabler for its customers across multiple end-market industries.
On this basis, we do not believe the bid fairly reflects the future value creation potential of the business.’
They joined other leading money managers including M&G Investments, Davidson Kempner and Canadian firm Mawer, who all have previously said they will vote against the deal.
Schneider first made an offer for the rest of the company in September, tabling 3100p a share for the 41 per cent of Aveva it does not already own.
But after New York-based Davidson Kempner accused the French firm of ‘opportunism’ and ‘poor communication’, the offer was raised to 3225p a share on November 11.
Schneider, however, said the offer was final.
Speaking to the Mail last night, Jupiter investment manager Richard Buxton said: ‘It would be good for London and long-termism if voters said no.
‘The increase on November 11 from Schneider wasn’t much. ‘But the question is will holders want to turn them down and stick it out as a minority.’
Buxton is one of the most recognised fund managers in the City and has previously called for software business Arm to come home and be listed in London.
Aveva is one of the London Stock Exchange’s few remaining technology firms. Spun out of Cambridge University in the 1960s, it provides software to help engineers design major industrial projects as well as products that help run factories.
Business Secretary Grant Shapps has come under increasing pressure to intervene in the Aveva deal on national security grounds.
Fears in particular have been raised about Schneider’s joint venture with Chinese conglomerate Delixi Electric. Critics say that if Aveva is taken over its proprietary technology is at risk of falling into Chinese hands.