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Aveva-Schneider deal falls through

The engineering and design software group has terminated its deal with Schneider Electric
December 18, 2015

Investors sent shares in Aveva (AVV) down 30 per cent in two days after the proposed reverse takeover by Schneider Electric fell through. The boards of the engineering and design software group and the French energy giant identified significant integration challenges that would require considerable risk and cost to overcome, meaning they were unable to reach an agreement.

IC TIP: Hold at 1,530p

The transaction would have seen Schneider acquire a majority stake in Aveva in return for its software business. Aveva's management previously admitted that untangling the shared back-office resources and properties of Schneider Electric and Schneider Software would be difficult. It may have also feared becoming distracted with integration while trying to navigate weak marine and oil and gas markets.

Given the costs and complexities of the deal, Aveva's directors determined that it wouldn't provide the boost to shareholder value that they previously expected. Fortunately for investors, the company won't have to pay any break fees. Moreover, management confirmed that trading remains in line with expectations and the full-year outlook remains intact.

Broker Numis Securities expects EPS of 68p in the year to March 2016, down from 74.3p in the previous financial year.