UK tech giant Aveva buys California's OSIsoft for $5 billion from backers including Softbank
Aveva today cemented its position as a rare UK tech giant as it snapped up Softbank-backed industrial software group OSIsoft for $5 billion.
The deal will follow from Aveva's merger with Schneider Electric's industrial software business in 2018 and see it expand the uses of its kit into industries from manufacturing to pharmaceuticals.
OSIsoft's tech allows factory operators to interpret real-time data from sensors around the plant.
Softbank has seen a flurry of disposals of assets since coming under pressure for the performance of its Vision Fund. Another UK tech company, Arm, is backed by Softbank and is currently up for sale with US giant Nvidia being in talks to buy it for more than $32 billion.
Since the Schneider deal, the France-based group has owned 60% of Aveva's shares, and it has voted in favour of the OSIsoft deal.
The latest bumper transaction will need to be funded by a rights issue, cash on Aveva's balance sheet and extra debt.
The move comes amid a flurry of takeover speculation tearing through the UK, with BT being the latest major company said to be facing takeovers. However, much of the action so far has been of UK companies being targets due in part to the Brexit-related weakness of the pound, which makes them cheap for foreign buyers.
After the deal, Aveva will have combined revenues of £1.2 billion a year and £330 million underlying profit.
Aveva said OSIsoft is key to capitalising on the trends in global manufacturing for the use of digital technology which allows factories to monitor far more closely the productivity, quality and environmental compliance at every stage of the manufacturing process.
The UK firm's chief executive Craig Hayman said: "The acquisition is perfectly in line with our strategic vision and it will accelerate the enlarged group's role in the digitisation of the industrial world."
The aim is to combine the two companies' systems to create a far more powerful position in being able to improve clients' productivity through using the Internet of Things - the next generation technology connecting machinery through the Internet.
It will also decrease Aveva's reliance on the oil and gas sector for its customer base, positioning it better for the future as carbon industries dwindle.
OSIsoft was set up in 1980 as a data software startup by an engineer specialising in control systems, J Patrick Kennedy. His family holding company owns 50.3% of the business with Softbank holding 44.7%. The remaining 5% is owned by Japan's Mitsui.
After the deal, Kennedy will stay on as chairman emeritus and will retain around 4% of the enlarged company's shares.
In an update on trading, Aveva said it had seen strong growth in subscription revenue through Covid although income from perpetual licences and services fell sharply due to Covid disruption and a move in the business model towards subscriptions for its services.
Aveva was advised by Lazard, with Numis and JPMorgan acting as brokers. USIsoft was advised by Morgan Stanley.