Pressure on Rees-Mogg over £9.5bn tech deal: French rival Schneider looks to snap up remaining stake in Footsie software giant Aveva
Business Secretary Jacob Rees-Mogg is facing a key test as considered one of Britain’s leading technology firms looks set to be snapped up by a French rival.
FTSE 100 software group Aveva is on the verge of disappearing from the London Stock Exchange (LSE) after Schneider Electric struck a deal to purchase the 41 per cent of the corporate it doesn’t already own for 3100p per share in money.
The offer values Aveva at nearly £9.5billion and is a 41 per cent premium to its closing price on August 23, the last trading day before Schneider confirmed it was mulling a bid for the group.
Business Secretary Jacob Rees-Mogg (pictured) is reportedly taking a look at reversing the controversial takeover of British computer chip maker Newport Wafer Fab
Nevertheless it is below the 4420p Aveva shares were trading at a yr ago, raising fears it’s being bought on the low-cost.
The swoop is a serious test for Rees-Mogg, who was appointed Business Secretary this month.
While Schneider already holds a controlling stake in Aveva, the takeover has fuelled concerns the UK’s tech sector is being hollowed out by overseas buyers and personal equity sharks.
Russ Shaw, of Tech London Advocates, an organisation that promotes London as a world tech hub, said it was ‘disappointing’ every time a British tech firm was acquired and called on the Government to work ‘much harder’ to encourage UK firms to list and remain on the LSE.
He said: ‘That is a very good reminder that although we now have plenty of good British-grown tech businesses, they will disappear from the general public market.
‘Subsequently, we want to ensure that that we proceed to construct a extremely strong pipeline of tech unicorns to list on the general public market, ideally the LSE.’
Alasdair Young, at investment bank Panmure Gordon, said the UK was ‘never going to have a world tech juggernaut’ if firms kept being sold, saying: ‘Aveva is considered one of the largest tech firms on the LSE. It could be an enormous shame to see it go.’
Founded in 1967 because the CADCentre, a research institute spun out of the University of Cambridge, Aveva became a personal company in 1983 following a management buyout before listing on the London market in 1996.
It provides computer software to assist engineers design major industrial projects in addition to products that help run factories.
Schneider’s swoop is the newest in a flurry of bids for London-listed tech firms that may test the mettle of Rees-Mogg amid growing concerns it is just too easy for foreign predators to purchase key UK firms.
The buyout falls inside the scope of the National Security & Investment Act, which provides the Government powers to dam takeovers. Rees-Mogg can have discretion on whether to call the deal in for an in-depth review.
Schneider Chinese link fears
Schneider Electric is a French industrial giant providing software and automation systems to enhance energy efficiency in buildings and factories.
Founded in 1836, it’s considered one of the largest firms in Europe with a market cap of nearly £59billion. It employs around 166,000 people.
Originally focused on steel-making and manufactured weapons within the nineteenth century, it divested its steel and shipbuilding businesses within the Nineteen Eighties and Nineties to concentrate on electricals.
There are concerns about a few of its international activities, notably its three way partnership with Chinese conglomerate Delixi Electric since 2007.
Schneider took a controlling stake in Aveva in 2017 in a £3bn reverse takeover. In 2013, it bought London-based Invensys, a maker of computer systems for refineries, in a £3.4billion takeover.
On the time, Invensys was chaired by Sir Nigel Rudd, who became chairman of defence group Meggitt, which was bought by US rival Parker Hannifin for £6.3billion this yr.
Three years later, Schneider took control of British retail brand Tower Electric, which provides fixings and fastenings comparable to cable clips to construction and electrical firms.
A key area of concern is more likely to be Schneider’s three way partnership with Chinese firm Delixi Group.
Former Tory leader Sir Iain Duncan Smith said the Government should intervene in takeovers to ‘stop Chinese firms from taking up’ the UK’s high-tech and strategic industries.
Last week, it was reported that Rees-Mogg could reverse the controversial takeover of British computer chip maker Newport Wafer Fab by Dutch firm Nexperia, which is owned by Chinese group Wingtech.
A call is due by October 3 and its former owner is claimed to be orchestrating a bid to purchase Newport Wafer Fab back.
Schneider might have to lift its offer to shareholders. Mark Kelly, at investment bank Cowen, said: ‘This realistically now all comes all the way down to whether or not that is a very good enough price.’