Having confirmed that it was in discussions over a potential acquisition earlier this month, Aveva (AVV) has announced that it will indeed purchase SoftBank (JP:9984)-backed OSIsoft for $5bn (£3.8bn). The deal will be funded through a $3.5bn rights issue to be launched later this year and $900m in cash and new debt facilities. The group is also issuing shares to OSIsoft’s founder and chief executive, Dr Patrick Kennedy, who will own around a 4 per cent stake in Aveva once the transaction is completed.
OSIsoft is an industrial software developer whose systems are used across a wide variety of industries, from manufacturing to pharmaceuticals. It enables customers to interpret real-time data from sensors across their facilities. Japanese conglomerate Softbank holds a 45 per cent stake via its Vision Fund.
Aveva’s chief executive, Craig Hayman, has called OSIsoft “one of the most prized assets in the industry”, and says the takeover will accelerate the group’s role in the “digitisation of the industrial world”. Industrial companies are increasingly turning to cloud computing and artificial intelligence to cut costs, automate processes and increase efficiency. OSIsoft will also diversify Aveva’s end markets, reducing the proportion of total sales to the oil and gas industry from 40 per cent to 35 per cent.
Together, the businesses will have a combined pro-forma annual revenue of £1.2bn and adjusted operating profit of £330m. OSIsoft is expected to boost Aveva’s earnings in the year to 31 March 2022. The tie-up will also make Aveva the largest UK-listed software company, leapfrogging enterprise software provider Sage (SGE).
This is Aveva’s second multi-billion-pound deal in recent years following its combination with Schneider Electric’s (FR:SU) industrial software business in 2018. Schneider currently owns 60 per cent of Aveva’s outstanding share capital and has said it will vote in favour of the acquisition and take up its full entitlement with regards to the rights issue.
While the Aveva-OSIsoft deal is expected to close at the end of year, LVMH’s (FR:MC) $16bn takeover of Tiffany & Co (US:TIF) has been delayed by three months according to Reuters. The transaction was approved by shareholders in February and was expected to complete on 24 August. The deadline has now been pushed back to November.
