Pressure on Rees-Mogg over £9.5bn tech deal: French rival Schneid


Pressure on Rees-Mogg of over £9.5bn tech deal: French rival Schneider looks set to take remaining stake in Footsie software giant Aveva







Business Secretary Jacob Rees-Mogg faces an important test as one of Britain’s leading tech companies is about to be snapped up by a French rival.

FTSE 100 software group Aveva is on the brink of delisting from the London Stock Exchange (LSE) after Schneider Electric struck a deal to buy the 41 percent of the company it does not yet own for 3,100 pence per share in cash.

The offer values ​​Aveva at nearly £9.5 billion and is a 41 percent premium to its closing price on August 23, the last trading day before Schneider confirmed it was considering an offer for the group.

Company Secretary Jacob Rees-Mogg (pictured) reportedly undoing controversial takeover of British computer chip maker Newport Wafer Fab

Company Secretary Jacob Rees-Mogg (pictured) reportedly undoing controversial takeover of British computer chip maker Newport Wafer Fab

But it is lower than the 4420p Aveva stock traded against a year ago, raising fears that it is being bought cheaply.

The blow is a big test for Rees-Mogg, who was appointed Business Secretary this month.

While Schneider already owns a majority stake in Aveva, the acquisition has fueled concerns that the UK’s tech sector is being eroded by foreign buyers and private equity sharks.

Russ Shaw, of Tech London Advocates, an organization that promotes London as a global technology hub, said it was “disappointing” when a British tech company was acquired and called on the government to work “much harder” to encourage British companies to take over. the list to remain on the LSE.

He said: ‘This is a good reminder that although we have many good British tech companies, they could disappear from the public market.

“That’s why we need to make sure we continue to build a really strong pipeline of tech unicorns to list in the public market, ideally the LSE.”

Alasdair Young, of investment bank Panmure Gordon, said the UK will ‘never have an international tech juggernaut’ if companies continue to sell, saying: ‘Aveva is one of the largest tech companies on the LSE. It would be a shame to see it disappear.’

Founded in 1967 as the CADCentre, a research institute emerged from the University of Cambridge, Aveva became a private company in 1983 after a management buyout before being listed on the London market in 1996.

1663794739 836 Pressure on Rees Mogg over 95bn tech deal French rival Schneid

1663794739 836 Pressure on Rees Mogg over 95bn tech deal French rival Schneid

It provides computer software to help engineers design major industrial projects, as well as products that help run factories.

Schneider’s attack is the latest in a series of bids for London-listed tech companies that will test Rees-Mogg’s mettle amid growing concerns that it would be too easy for foreign predators to buy key British companies.

The buyout falls under the scope of the National Security and Investment Act, which gives the government powers to block takeovers. Rees-Mogg has the freedom to choose whether or not to submit the deal for an in-depth review.

Schneider Chinese link fears

Schneider Electric is a French industrial giant that provides software and automation systems to improve energy efficiency in buildings and factories.

Founded in 1836, it is one of the largest companies in Europe with a market capitalization of nearly £59 billion. About 166,000 people work there.

Originally focused on steelmaking and fabricated weapons in the 19th century, it sold its steel and shipbuilding operations in the 1980s and 1990s to focus on electrical engineering.

There are concerns about some of its international operations, notably its joint venture with Chinese conglomerate Delixi Electric since 2007.

Schneider took a majority stake in Aveva in 2017 in a £3 billion reverse takeover. In 2013, it bought London-based Invensys, a maker of computer systems for refineries, for a £3.4 billion acquisition.

Invensys was chaired at the time by Sir Nigel Rudd, who became chairman of defense group Meggitt, which was bought by US rival Parker Hannifin this year for £6.3bn.

Three years later, Schneider took control of the British retail brand Tower Electric, which supplies fasteners and fasteners such as cable clips to construction and electric companies.

A major concern is probably Schneider’s joint venture with the Chinese company Delixi Group.

Former Tory leader Sir Iain Duncan Smith said the government must intervene in acquisitions to prevent Chinese companies from taking over Britain’s high-tech and strategic industries.

It was reported last week that Rees-Mogg could reverse the controversial acquisition of British computer chip maker Newport Wafer Fab by Dutch Nexperia, which is owned by Chinese group Wingtech.

A decision is due to be made on October 3, and the former owner would make an offer to buy back Newport Wafer Fab.

Schneider may need to increase its shareholder offer. Mark Kelly, of investment bank Cowen, said: ‘Now it all comes down to whether this is a sufficient price.’