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On 25 November 2022, AVEVA Group plc (AVEVA) and Schneider Electric SE that the requisite majority of eligible AVEVA Shareholders voted to approve the improved offer by Schneider Electric to acquire the entire issued and to be issued share capital of AVEVA (excluding AVEVA shares already held by Samos Acquisition Company Limited).

AVEVA shareholders have actively engaged with the Schneider Electric offer in the form of bumpitrage, which involves agitating the deal for better terms. Bumpitrage can be a risky tactic however, minority shareholders in AVEVA have succeeded in persuading Schneider to improve its offer terms.

Schneider Electric, which already has a 60% shareholding in AVEVA, first made an to buy out minority shareholders in the UK software group on 21 September 2022 in a deal valuing AVEVA at £9.5bn, the largest offer for a UK public company so far in 2022. Under the terms of the offer, AVEVA shareholders would receive £31 per share which represented a 41% premium to the company’s closing share price on 23 August 2022, the last business day before Schneider Electric made a preliminary approach to AVEVA.

Schneider Electric’s initial £9.5bn offer for the remaining 40% of AVEVA it does not already own, was met with opposition from some of AVEVA’s minority shareholders. Despite the endorsement of the offer by AVEVA’s independent board of directors, Funds which held almost 7% of AVEVA, including Davidson Kempner Capital Management, M&G Investments and Mawer Investment Management labelled Schneider Electric’s initial offer as opportunistic and said that if it were to succeed on the original terms it would represent a significant blow to the listed UK technology sector. They also voiced their disappointment that the board had recommended the ‘opportunistic bid’ to investors and expressed their intention to reject the offer at the company’s shareholder meeting, citing that it materially undervalues the company and was trying to take advantage of recent weakness in the share price.

In our , we noted that since Schneider Electric is the largest shareholder in AVEVA opposition was only needed from 10% of shareholders in order to successfully block the deal as Schneider Electric was unable to take part in the vote.

Commenting on the original offer terms, Philip Aiken, the Chairman of AVEVA :

‘The unanimous recommendation of the acquisition by the Committee of Independent Directors took into consideration the value proposition for our minority shareholders as well as the interests of other stakeholders in the business. We are currently pursuing a strategy which will deliver further value to shareholders over the long term. However we believe that the acquisition represents attractive certain cash value and an accelerated, de-risked opportunity for shareholders to realise their investment in AVEVA in the near-term.’

However, after activist shareholders called on Aiken to defend the interests of minority shareholders, Schneider Electric and the AVEVA independent directors went back to the drawing board.

On 11 November 2022, Schneider Electric and the AVEVA independent directors announced that they have reached agreement on the terms of an . The increased offer values AVEVA at £9.9bn and represents a 47% premium to AVEVA’s closing share price immediately before the commencement of the offer period. 

In order to allow the AVEVA minority shareholders to properly consider the increased offer, the court meeting and general meeting initially scheduled to be held on 17 November 2022 were adjourned until 25 November 2022.

On 25 November 2022, AVEVA and a relieved Schneider Electric that 83% of minority shareholders voted to approve the deal at the investor meeting, surpassing the requisite 75% threshold, bringing an end to the takeover battle. The deal, which was almost torpedoed by shareholder activism, has bolstered concerns that star UK technology companies are being lost to foreign businesses due to the relative decline in UK valuations and currency. The deal is due to close in Q1 2023 following which AVEVA will be de-listed from the London Stock Exchange and French industrial conglomerate Schneider Electric will own 100% of one of Britain’s oldest technology companies.

Jean-Pascal Tricoire, the CEO of Schneider Electric :

'Since Schneider Electric and AVEVA agreed to combine our software businesses five years ago, we have recognised the growing opportunity for our technology to address three of the highest priorities of our industrial customers today: full digitisation, energy security and efficiency and sustainability… By taking 100 per cent. ownership of AVEVA, we will be able to grow the business faster by simplifying decision-making, enabling seamless interactions between teams, accelerating our investments in R&D and enabling a more coordinated sales strategy, while respecting the companies' particular strengths, and accelerating the transition to a subscription business model under private ownership.'

Following the takeover, Schneider Electric will retain AVEVA’s Cambridge headquarters, a move which may help to placate concerns that London is being stripped of its tech companies by foreign bidders raiding the public market. The AVEVA Independent Committee believes that AVEVA will continue to play a key role in engineering and industrial software innovation both in the UK and globally.

Market Tracker will continue to monitor the transaction as it develops and the theme of shareholder engagement will be explored in more detail in our upcoming 2022 Public M&A Trend Report.