What's going on?

Aveva, a large UK-based software company, is being taken over by France-based Schneider Electric in a deal worth more than �3 billion!

What does this mean?

Aveva was initially part of Cambridge University before it became an independent company in 1983. It provides software to companies in industrial sectors like oil and gas, power and marine services. Both Aveva and Schneider are focusing on developing new software and automation tools. By combining with each other, the two companies are a much bigger global force and should be better positioned to compete in the space � other industrial giants, like General Electric, are also focusing their resources on developing these sorts of software-based services for industrial clients.

Why should I care?

For markets: Aveva will remain a separate UK-listed stock, despite being taken over by Schneider.

The deal is being structured in such a way that Schneider will control Aveva (it will own 60% of Aveva, while Aveva�s current shareholders keep 40% and receive a cash payout for the 60% they�re selling to Schneider), but Aveva will remain an independent company. Schneider is transferring its entire software business to Aveva as part of the deal.

The bigger picture: Digitization requires investment, which is easier to pay for with scale.

Technology development is not cheap, and experience in one area can often be applied in another. By combining their expertise and, crucially, their financial resources, the two companies are betting that their greater size will make it easier to compete in industrial digitization. Also, Aveva and Schneider are primarily active in different industries (e.g. Aveva services energy companies while Schneider has food and beverage companies as clients), and they differ in geographical presence as well (Schneider is much bigger in the US). These differences provide further opportunities for the companies to benefit from each other, for example, by cross-selling their tech into different industries.