UK software provider Aveva to buy SoftBank-backed OSIsoft for $5 billion

(Reuters) – British industrial software provider Aveva Group is buying SoftBank-backed peer OSIsoft for an enterprise value of $5 billion, it said on Tuesday, as it seeks to expand its services with the California-based firm’s PI system.

Industrial companies have been incorporating more software into their manufacturing to cut costs and improve their supply chains, benefiting providers such as Cambridge-based Aveva, a member of Britain’s FTSE 100 index of leading shares.

Aveva said it plans a rights issue amounting to about $3.5 billion to help fund the purchase of OSIsoft, which makes software that captures data from ships, chemical boilers, power plants and other facilities in industries including oil and gas, mining, pulp and paper and water.

“The acquisition of OSIsoft … will accelerate the Enlarged Group’s role in the digitisation of the industrial world, which is being driven by a need for sustainability, the industrial internet of things, Cloud, data visualisation and artificial intelligence,” Aveva’s Chief Executive Craig Hayman said.

Aveva’s last major deal was three years ago when France’s Schneider Electric took a 60% stake in the company.

Shares in Aveva were up 3% in early trade and Aveva said Schneider Electric has committed to vote in favour of the deal and take part in the rights issue.

The British company said it would fund the deal using a combination of rights issues, cash on balance sheet and new debt, as well as issue shares to one of OSIsoft’s shareholders, Estudillo.

OSIsoft’s PI system, which collects, analyses and shares data from multiple sources, will be established as a business unit of the enlarged company, Aveva said.

The deal is expected to close at the end of the year.

Aveva’s pretax profit rose 22% on an adjusted basis in the financial year that ended in March but its share price fell 5.5% this year by Monday’s close after it warned in April that its performance in the first half of this financial year would be hit by the global economic downturn.

OSIsoft’s founder and CEO J. Patrick Kennedy will remain involved in the business after the takeover, Aveva said, through his appointment to a newly established role of chairman emeritus.

Kennedy’s Estudillo has a 50.3% stake in OSIsoft, while SB/OSI, a SoftBank owned firm, holds a 44.7% stake and the remaining is held by MDT Holding, which is owned by Mitsui & Co.

Lazard was the sole financial adviser to Aveva.

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