Aveva buys OSIsoft for $5 billion Softbank cashes out

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UK based software company Aveva, majority-owned by French automation specialist Schneider Electric, struck a merger deal to acquire OSIsoft, the U.S.-based data management company for $5 billion.

Aveva will become Britain’s largest software group, after agreeing to the $5 billion, merger with the American based OSIsoft.

The deal “strengthens our position as a global leader in engineering and industrial software,” Aveva said in a statement. Both companies now sell operational data software and services to create greater automation.

The Aveva and OSIsoft deal is complementary in terms of business and specialization. 

The market agrees. Aveva shares jumped 6% on the news of the purchase and continue up to a 7.25% increase at market close. This makes the merged conglomeration worth roughly $10 billion.

Aveva 

With a headquarters in Cambridge, England, tech company Aveva is a pioneer in computer-aided design. 

Aveva helps companies in the design of industrial machinery. They manage complex supply chains through state-of-the-art industrial software.

The company has annual revenues of 10.3%, over the last 10 years. It delivered an adjusted annual profit-growth of 18.5% during the past three years.

Schneider Electric has approved the deal. They hold 60% of shares in Aveva.

OSIsoft

Founded in 1980, OSIsoft has 1,400 employees. They are a software developer that collects data for its customers through their real-time data historian application, OSIsoft Processed Information Historian. 

The PI is an application that can efficiently record data from process control systems (ex. DCS, PLC) into a compressed time-series database.

OSIsoft is backed by a Japanese tech firm Softbank which holds a 44.7% stake. Other shareholders include Estudillo Holdings, majority-owned by founder and chief executive, J. Patrick Kennedy, who holds a 50.3% stake. And Japanese conglomerate Mitsui with a 5% stake. 

An inspired combination

The $5 billion agreement is representative of a 32.9-times multiple of the enterprise value and profit of OSIsoft. Most of the money will be paid in cash ($4.4 billion).  

The new business will seek to capitalize on the tech “mega-trend” towards high-level digitization in the drive for efficiency, flexibility, and sustainability.

The offer will be pitched to companies in the industrial space, manufacturing execution system (MES), data centers, governmental centers, along with its position in power and utilities, chemicals and petrochemicals, food and beverage, and life sciences.

The company’s PI System is often paired with Aveva’s industrial software in customer deployments. The companies have teamed up before to offer a system of record for capture, storage, analysis, and sharing of industrial sensor-based data. 

The pair said they will “service the largest digital transformation projects in history.” 

Softbank to cash out

The sale also indicates Japanese Softbank continues to cash out its tech stocks. They own 44.7% of OSIsoft and will receive $2 billion in cash from the deal. 

The tech sell-off is part of the Masayoshi Son, the founder’s plan to dispose of $42 billion of assets. Then to buy back shares and shore up its balance sheet, following some very unfortunate investments. He invested heavily in failing office space center WeWork.

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