Aveva shares jump 25% on £550m Schneider Electric deal

20th Jul 2015 08:41

(ShareCast News) - Shares in Aveva were up by more than a quarter after engineering design firm Schneider Electric said it would acquire the firm in a reverse takeover deal, beating out rumoured rivals Emerson and General Electric.At 0833 BST shares in Aveva were up 26.47% to 2,2241.35p. Under the deal Aveva would acquire related company Schneider Software in return for the issue of shares valued at £1.3bn.At the same time Schneider would make a £550m cash payment to Aveva for immediate distribution to pre-deal shareholders.The payment represents about 50% of Aveva's current market cap.Schneider would then own about 53.5% of the newly enlarged group, which would have revenues of about £535m and earnings of £130m.Westhouse labelled the deal "inspired" and retained an 'add' rating on the stock."By roughly doubling the scale of the group, AVEVA is both building critical mass and diversifying away from the volatile and unpredictable segments of oil & gas and shipbuilding."These markets are highly lucrative when "in vogue" but adding in additional vertical segments, as well as new software products and distribution channels, AVEVA is making a major strategic step forward," Westhouse analysts said in a note.