Aveva

Aveva — the British developer of solutions for design, engineering and project management in the oil, energy, ship-building and shelf and gas industry. AVEVA is a complex of software solutions for management of lifecycle of the vessel.

The solution of the company integrates all project disciplines: hydrodynamics and hydrostatics, construction design, production planning, creation of 3D models, etc. AVEVA technologies provide creation of "virtual shipyard", allow designers to work in one command irrespective of a location and to integrate data from different sources and also automate production process.

Business in Russia

Main article: Aveva Russia (Aveva)

History

2020

OSIsoft purchase

On August 25, 2020 it was officially announced sale of OSIsoft of Aveva company. Thanks to this transaction which cost is $5 billion the buyer will be able to strengthen positions in the market of industrial software. Read more here.

Submission of the concept of end-to-end informatization on the basis of digital doubles of the enterprises

The updated AVEVA company in April, 2020 submitted the concept of end-to-end informatization on the basis of digital doubles of the enterprises.

Transition to the third decade of the 21st century became for the British company AVEVA an important business mark: there passed two years after fatal consolidation with Schneider Software, software division of Schneider Electric, and the company, really, reached the new level of development. Say large-scale system changes about it, both in the most engineering software of AVEVA, and in market segments to which these software products are addressed. Read more here.

2017: Schneider Electric buys Aveva from the third attempt

On September 5, 2017 the French engineering company Schneider Electric making a utilities equipment announced Aveva purchase.  The bargain is concluded after two unsuccessful attempts.

Under the terms of the agreement, Aveva will be integrated with software division of Schneider. The last will pay 550 million pounds sterling ($720 million) for a 60 percent share in joint group. After closing of the transaction which should take place until the end of 2017 shareholders of Aveva will receive additional 100 million pounds sterling from the company and will reserve 40% of stocks of the new company which total cost is estimated almost at $4 billion.

Schneider Electric will integrate the software division with Aveva in the company worth nearly $4 billion

Schneider tried to purchase Aveva twice — in July, 2015 and June of the 2016th. However in both cases negotiations were completed fruitlessly. The head of Aveva James Kidd is sure that this time nothing will prevent the transaction.

Now we are much more in the best provision, than earlier. We signed the merger agreement with Schneider — Kidd who will become the general and chief financial officer of the new company reported in an interview to Reuters agency.

As a result of consolidation of software assets Schneider and Aveva in the market of the engineering and industrial software the producer with annual revenues in the amount of 657.5 million pounds sterling ($856.5 million) and profit about 145.8 million pounds sterling will appear.

According to James Kidd, accession to Schneider will allow Aveva to strengthen presence of the software products in such sectors as the food, mining and oil and gas industry, pharmaceutics and shipping.

Schneider refused total absorption of Aveva as the British company has "own structure, culture and the mentality",  Jean-Pascal Tricoire, the president and the CEO of Schneider noted.^[1]

2015

Failure of the transaction on sale of Aveva of Schneider Electric company

On December 15, 2015 Aveva announced failure of the transaction on sale of a controlling stake of the company to the French producer of the electrotechnical products Schneider Electric. The transaction was recognized too risky and expensive.

Within the agreement signed in July, 2015, Schneider Electric had to take more than a half of shares of Aveva for 550 million pounds sterling ($834 million) and to make consolidation of software company assets.

Schneider Electric refused to take Aveva controlling stake

However negotiations were interrupted by mutual consent as the companies saw in the transaction "considerable problems with integration" which could result in "big additional risks and expenses", reports the Bloomberg agency with reference to the statement of Aveva.

"At first it was the good transaction, and the entrepreneurial logic still remains there. But if finance does not work, and risks are too high for our investors, then it would be wrong to conclude this bargain. I am sure that we do what is necessary" — the CEO of Aveva Richard Longdon said.

According to him, in the course of due diligence (a comprehensive investigation of activity of business, its financial status and market position) Aveva understood that assets which Schneider Electric wanted to integrate are too deeply integrated with the company therefore merge could be more costly, than it was supposed.

Though no payments of penalties for the broken transaction are provided in the agreement, investors extremely negatively reacted to failure from Aveva sale of shares. The cost of securities of the British software maker within Tuesday, December 15, 2015, fell for 37% that was not since 1998. The quotations of Schneider Electric rose by 0.7%.

Aveva intends to continue search of partners and new opportunities for transactions on merges and absorption, Richard Longdon said.^[2]

Schneider Electric announced Aveva purchase

On July 20, 2015 it became known of sale of a controlling stake of Aveva to the French producer of the electrotechnical products Schneider Electric. This news provoked rapid growth of stock of software developer for design automation.

Under the terms of the agreement, Schneider Electric which is a part the division of Schneider Software, will pay for Aveva about 550 million pounds sterling ($858 million) cash, and in exchange will receive 74 million new shares (53.5% of the total number of the securities which are in circulation) with a total cost of 1.3 billion pounds sterling ($2 billion). It is curious that still on July 17, 2015 (three days before the declaration of the transaction) market capitalization of Aveva made 1.1 billion pounds sterling ($1.7 billion).

After the declaration of sale of Aveva of its action at the London exchange grew in price for 30%. The quotations of Schneider Electric rose slightly.

After the transaction on sale of a controlling interest of Aveva is closed, assets of firm will be a part of Schneider Software. As a result in the market there will be a united company whose annual revenues are stated in 534 million pounds sterling ($833 million), and profit – in 130 million pounds sterling ($202.8 million). In this company there will also be assets of other British CAD developer — Invensys which was purchased by Schneider Electric in 2013 for 3.4 billion pounds sterling ($5.2 billion).

As notes the The Financial Times edition, after sale of a controlling interest Aveva will remain the independent company.

"The transaction will transform Aveva, having turned it into the global leader in the market of software for production applications and having strengthened the competitive level of the company on the world scene", – the head of Aveva Richard Longdon said.

Besides, according to the top manager, sale of shares of Schneider Software will help Aveva to expand product assortment, to diversify the markets and to strengthen geographical influence on the American market. After the transaction shareholders of Aveva will possess 46.5% of securities of the united company.^[3]

Decline of revenue by 19% to $323.6 million

On May 19, 2015 Aveva published indicators of the business according to the results of 2015 financial year. Both profit, and revenue of the British company were reduced.

For the 12-month reporting period closed on March 31, 2015 sales of Aveva made 208.7 million pounds sterling ($323.6 million) that is 19% less in comparison with 2014 financial year. Net profit for this period decreased to 41.6 million pounds sterling ($64.6 million) from 51 million pounds sterling.

Both profit, and revenue of Aveva company were reduced at the end of year

EMEA (Europe, the Middle East, Africa) remains the most profitable region for Aveva. In these countries the company earned about 103.5 million pounds sterling ($160.1 million) in 2015 financial year that is 1% more, than the previous year. The company says that income in EMEA could be higher if not devaluation of euro and ruble in relation to dollar. Because of adverse exchange rate fluctuation CAD producer did not get 12.8 million pounds sterling (nearly $20 million).

In other main regions – North and South America and also Asia-Pacific – sales were reduced by 1% and 20% respectively. The vendor noted the flat demand on the solutions in the countries of South America and Northeast Asia in the first half of financial year.

Along with the publication of the annual accounts Aveva announced increase in dividends for 14%. However investors did not apprehend this statement optimistically therefore the stocks Aveva after publication of financial results fell in price for 4.5%. A day earlier securities rose in price almost for 5% after in media rumors about sale to the company appeared.

According to the Sunday Times edition, the companies look narrowly at Aveva Schneider Electric, Emerson and General Electric. The head of Aveva Richard Longdon said that the company did not receive any offers from these producers though negotiations with it are constantly conducted within cooperation. The top manager added that Aveva is ready to consider all standing offers.^[4]

Notes