French buyer defends £10bn takeover of British software giant Aveva

The French buyers of British software giant Aveva have defended the deal following a backlash.

Denying he bought it on the cheap, Schneider Electric chief executive Jean-Pascal Tricoire said his company paid a ‘very rich premium’ for the Cambridge company.

He also dismissed fears over Schneider’s links to China and insisted he was committed to protecting jobs.

But the comments drew criticism from leading City fund manager Richard Buxton, who opposed the deal at the time and last night said Schneider was likely to ‘have done very well’ given the price it paid.

Business Secretary Grant Shapps last month waved through Schneider’s acquisition of the 41 per cent of Aveva it did not already own, in a deal that valued it at £10billion.

The deal had been approved by investors in November despite concerns by some that Schneider was underpaying. 

But Tricoire, told the Mail while at the World Economic Forum in Davos: ‘It’s a listed company and we paid a very rich premium.’

Schneider had last September agreed to buy the stake at £31 a share, a 40 per cent premium to the price Aveva was trading at before his interest became known.

It then further sweetened the price to £32.25, a 47 per cent premium, to allay investor unrest. 

Asked about the company’s commitment to jobs and its future in the UK, Tricoire said: ‘We’ve committed to all this in our official communication from day one.

We are committing on the preservation of knowhow, IP [intellectual property] and people.’ In the takeover agreement, Schneider said it intends to maintain Aveva’s HQ in Cambridge, develop its research and development in the UK and back existing plans to boost its operations in the city.

A further concern centred on the joint venture that Schneider has had since 2007 with Chinese conglomerate Delixi Electric.

That had raised fears that Aveva’s proprietary technology was at risk from Beijing.

Some politicians and analysts wanted the deal to be reviewed for this reason under the National Security and Investment Act.

Tricoire said: ‘Most of what we do in China is 100 per cent Schneider. The digital arm of Aveva is operating in China on its own.’

The implication of his comments seemed to be that little would change in relation to China. 

Aveva, which provides software to help engineers to design major industrial projects and products to help run factories, was founded in 1967 and has since pioneered industrial design technologies.

This week, chief executive Peter Herweck insisted it would remain autonomous, as the deal was formally completed. Several major investors had threatened to reject the previous offer, including the hedge fund Davidson Kempner.

Even after the deal was sweetened, the New York firm said it was ‘highly opportunistic’ and said it did not take into account long-term potential. Herweck said: ‘The independent board reviewed the offer, talked to several independent consultants that did evaluations and that’s why they supported the first offer.

‘Of course, when shareholders are not happy they voice their unhappiness and hence it came to a revised offer, which has been largely accepted by shareholders.’

Buxton, investment manager at Jupiter Asset Management, last night expressed scepticism about Schneider paying a rich premium. ‘I think if the business performs as they would like it to, then in three years’ time they will have done very well.’