Engineering software firm Aveva (AVV) has agreed a $5 billion deal to buy Softbank-owned data analytics business OSIsoft.
The acquisition will strengthen Aveva’s position in industrial software, with combined pro forma revenue of about £1.2 billion and adjusted earnings before interest and tax (EBIT) of £330 million for the enlarged group, the company said.
OSIsoft has grown largely organically, chalking up average annual revenue growth of 10.3% in the decade between 2009 and 2019, and has a solid record for cash generation.
SUBSCRIPTIONS ACCELERATION
Perhaps the most interesting part of the deal is that it will speed up Aveva’s already firm conviction to move more clients to recurring subscriptions based contracts.
Analysts at Megabuyte estimate that OSIsoft earns more than the 60% Aveva targets with acquisitions.
In July it reported subscription revenues up 30% as the pandemic hastened the switch to cloud-based, digital demand.
Aveva plans to raise $3.5 billion to help fund the deal, a move that shareholders will need to support in a vote expected to be held in late October or early November. Early indications are positive, with Aveva shares rallying close on 3.5% to £44.805 on Tuesday, making it one of the FTSE 100 biggest gainers on the day.
