ALEX BRUMMER: Vote to keep Cambridge software champ Aveva in the UK

Minority investors in £10billion Cambridge born-and-bred industrial software champion Aveva have a rare chance this week to win one for Britain.

France’s Schneider Electric is seeking to buy the 41 per cent of the shares it doesn’t own in Aveva through a scheme of arrangement which requires the consent of 75 per cent of minority investors.

Several top 20 investors, including M&G, are already lukewarm about the transaction and just 10 per cent of the share register could see Schneider off the field of battle.

Most of the objections to the Schneider bid have been about price. M&G describes the offer as ‘opportunistic’. 

Earlier this month Schneider improved its offer by 4 per cent to £32.25-a-share. It is by not clear that this will get the £68billion French giant across the finish line when votes are counted on Friday.

As Rishi Sunak’s government seeks to reboot the UK as Europe’s Silicon Valley, taking advantage of the nation’s great research universities and leadership in software and technologies such as artificial intelligence (AI), there are good strategic reasons for ministers to intervene.

Among other things, Schneider Electric is deeply involved in China at a time when Western governments are coming down hard on technology transfer. 

The German authorities recently rejected two Chinese bids for home-grown tech enterprises. 

Last week Britain used new powers, granted by the National Security & Investments Act, to block a takeover of Newport Wafer Fab by Chinese controlled Dutch firm Nexperia.

Schneider makes no secret of its desire to increase its involvement with the People’s Republic. Yin Zheng, president of Schneider Electric China, is quoted by the Global Times (the English language offshoot of the People’s Daily) as to the huge market potential of ‘decarbonisation and digitalisation’.

As a leading UK industrialist told me recently, China’s main reason for joint ventures, or taking over Western enterprises, is to gain access to proprietary technology. 

The UK’s high-tech, engineering and aerospace sector is being seriously denuded by overseas takeovers. Such deals are not only a danger to R&D and intellectual property, but a threat to London as a financial sector.

Data collated by Bloomberg suggests that the Paris Bourse has already overtaken the London Stock Exchange in scale.

The numbers can be challenged. But fund manager Schroders says that overseas and private equity takeovers are diminishing investment opportunities in the FTSE 350.

Schneider argues that Aveva is no longer the Cambridge-based entity it once was. It has been transformed by the injection of Schneider’s software arm and the £4.2billion 2020 purchase of US competitor OSIsoft.

Even if France can live with the possibility of China gaining access to smart industrial software, it is hard to think the US would be that comfortable. 

The revised bid by Schneider has failed to ignite support of minority investors. If necessary it may come back with an open offer rather than a scheme of arrangement, possibly at a higher price. Whatever the price, there are good strategic reasons for this deal to be stopped in its tracks.

Return to sender

‘Come back, all is forgiven’ is the message from the Walt Disney board to veteran chief executive Bob Iger, 71.

But having failed to fix the succession in 15 years at the helm there must be questions as to why he should be able to do it now.

Iger injected new creative dynamism into Disney with a series of eye-catching acquisitions including Pixar Animation, Marvel Entertainment and 20th Century Fox.

Yet there is a suspicion that growth under his leadership came at the expense of too much debt and goodwill.

Disney, under the short-lived leadership of ousted boss Bob Chapek, was too slow to streaming and vulnerable to cord-cutting (subscription cancellation).

Doing a Steve Jobs and restoring credibility as the world economy slows and spending power is trimmed is a big ask.

Late calls

The demand by the Bank of England’s Jon Cunliffe to bring the crypto world under the umbrella of regulation looks timely following the implosion of FTX, which collapsed owing its biggest creditors £2.5billion.

Last month’s crisis in liability-driven investments (LDIs) used by pension funds was also a consequence of lax policing.

Intervention by the authorities now looks to be after the Lord Mayor’s Show.

The surge in shadow banking has been an accident waiting to happen.