UK based software company Aveva, majority owned by France based automation specialist Schneider Electric, has struck a deal to acquire US data management outfit OSIsoft for $5 billion. OSIsoft is backed by Japan-based tech firm Softbank. The pair said they will “service the largest digital transformation projects in history”, reaching across the wide Industry 4.0+ (plus!) sector.
Their combined offer – industrial software and industrial data management – will create a “global leader” in the Industry 4.0 market, they said, with combined revenue of £1.2 billion and adjusted profits of £330 million. The new business will seek to capitalise on the tech “mega-trend” to harness data to drive efficiency, flexibility, and sustainability, they said.
Their combined offer will be pitched to companies in process industries, along with data centre and government customers, to accelerate digital transformation. OSIsoft, founded in 1980, has around 1,400 employees. It claims compound annual revenue growth of 10.3 percent over the last 10 years, and delivered adjusted annual profit-growth of 18.5 percent during the past three.
The company’s PI System, often paired with Aveva’s industrial software in customer deployments, offers a system of record for capture, storage, analysis, and sharing of industrial sensor-based data. It is deployed at 14,000 sites in 127 countries, with over 1,000 of the world’s leading power and utilities companies, 38 of the top 40 Global Fortune oil and gas companies, all of the top 10 metals and mining companies, 37 of the top 50 chemical and petrochemical companies, and nine out of 10 of the top pharmaceutical companies.
OSIsoft has three shareholders: Estudillo Holdings, majority owned by founder and chief executive J. Patrick Kennedy, holds a 50.3 percent stake; Japan-based SoftBank holds a 44.7 percent stake; and Japanese conglomerate Mitsui holds a five percent stake. Schneider Electric, which has approved the deal, holds around 60 percent of shares in Aveva.
The $5 billion fee represents a 32.9-times multiple of the enterprise value and profit of OSIsoft. Around 88 percent of the fee ($4.4 billion) will be paid in cash, and 12 percent ($0.6 billion) will be paid to Estudillo in newly issued shares, Ninety percent of the new shares will go to Kennedy and 10 percent to other shareholders.
PI will be established as a business unit within the enlarged group. Kennedy will take a non-board role as chairman emeritus, with a share ownership in the enlarged group of about four percent. The duo cited “cross selling” opportunities and “meaningful” cost synergies.
Aveva forecasts 41 percent, 36 percent, and 23 percent of new cross-sales will go in the Americas, EMEA and Asia Pacific, respectively. It said the deal will strengthen its digital twin, HMI/SCADA, manufacturing execution system (MES), and asset performance propositions, along with its position in the power and utilities, chemicals and petrochemicals, food and beverage, and life sciences segments.
The pair will offer a “full-stack solutions that span edge, plant, and enterprise deployment models”, they said. “It will be business as usual at OSIsoft,” said Kennedy. The transaction is expected to close in late 2020 or early 2021, subject to regulatory approvals.
In a letter to customers, Kennedy commented: “Aveva… [has] a majority owner that is very large and stable… This foundation will give us the runway to start planning the next 40 years. I believe in the combination. I have agreed to become… the largest individual shareholder in Aveva. I plan to actively ensure continuity of systems, people, services and development.”
He added: “During months of negotiation, I have told every suitor that my priorities were our customers and our employees, and only after those came price. Frankly, it took them a while to believe me, but in the end I believe that I have found the ideal place to let PI develop… for the next 40 years.”
He said in a statement: “Together we will be better able to service the largest digital transformation projects in history, including across industry 4.0+ (plus) and industrial IoT… The next chapter in PI’s fifth decade will be exciting for our employees and customers, and I look forward to my continued involvement.”
Craig Hayman, chief executive at Aveva, said: “This will… open the flood gates to new opportunities which will accelerate the delivery of our digitization vision… This agreement will enable customers to improve business processes as well as eliminate inefficiencies.”
Peter Herweck, vice chairman at Aveva and executive vice president for industrial automation at Schneider Electric, said: “The combination will accelerate our Aveva partnership with significant customer value across process and hybrid automation industries plus the building and infrastructure sectors. Aveva’s industrial software is a key element of Schneider Electric’s IoT-enabled architecture, EcoStruxure which will be further enhanced by OSIsoft’s PI System and its support for open infrastructure.”
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