TIDMAVV
RNS Number : 0697X
AVEVA Group PLC
25 August 2020
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN
OFFER OF SECURITIES IN ANY JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
25 August 2020
ACQUISITION OF OSISOFT, LLC ("OSISOFT")
STRENGTHENING AVEVA'S POSITION AS A GLOBAL LEADER IN INDUSTRIAL
SOFTWARE
ENHANCING AVEVA'S ABILITY TO ACCELERATE THE DIGITAL
TRANSFORMATION OF THE INDUSTRIAL WORLD AND PROMOTE
SUSTAINABILITY
ADDING SIGNIFICANT SCALE AND INDUSTRY DIVERSIFICATION
STRONG VALUE CREATION POTENTIAL AND EARNINGS ACCRETIVE BEFORE
SYNERGIES
FINANCED BY NEW DEBT FACILITIES AND A PROPOSED RIGHTS ISSUE
Introduction
AVEVA Group plc ("AVEVA" or the "Company"), a global leader in
industrial software, announces that it has reached agreement on the
terms of an acquisition of OSIsoft (the "Acquisition"), at an
enterprise value of $5.0 billion.
Founded in 1980 by Dr. J. Patrick Kennedy, OSIsoft is a global
leader in real-time industrial data software and services. Its PI
System is the system of record for customers for data capture,
storage, analysis and sharing of real-time industrial sensor-based
data across all operations, enabling customers to connect disparate
sources of time-series data in an efficient and cost-effective
manner. Through OSIsoft's PI System, customers draw insights, make
better decisions, optimise operations, and drive digital
transformation.
OSIsoft is headquartered in California, USA, and has
approximately 1,400 employees. OSIsoft's PI System is used by its
customers across 14,000 sites in 127 countries and is widely
utilised in the process industries such as manufacturing, energy,
utilities, pharmaceuticals, and life sciences, as well as within
data centre facilities and across the public sector including
federal government. OSIsoft works with over 1,000 of the world's
leading power and utilities companies, 38 of the Global Fortune Top
40 oil & gas companies, all of the Global Fortune Top 10 metals
and mining companies, 37 out of 50 of the world's largest chemical
and petro-chemical companies and 9 out of 10 of the Global Fortune
Top 10 pharmaceutical companies. Furthermore, as businesses deploy
increasing levels of sensor-enabled equipment, more assets are
streaming more data, increasing the need for and value derived from
the PI System.
OSIsoft has a strong track record of organic growth and cash
generation, with revenue growing at a 10.3% CAGR over the last 10
years (2009-2019). In the period from 2016 to 2019, OSIsoft
delivered a revenue CAGR of 9.7% and an Adjusted EBIT CAGR of
18.5%. This strong growth continued this year as the imperative for
digital transformation has continued through the COVID-19 crisis,
with year over year revenue growth of 10.0% in the six months ended
30 June 2020. In the twelve months ended 30 June 2020, OSIsoft had
revenue of $488.5 million and Adjusted EBIT of $152.2 million 1
.
1 FY2016-2019 CAGRs are shown according to ASC 605. H1 2019 and
TTM to 30 June 2020 figures are shown according to ASC 606. See
Appendix for details.
OSIsoft is currently owned by three shareholders:
-- Estudillo Holdings Corp. ("Estudillo"), a company majority
owned by Dr. J. Patrick Kennedy and his family, which holds a 50.3%
stake;
-- SB/OSI, Inc. ("SoftBank"), a company owned by SoftBank Group, which holds a 44.7% stake; and
-- MDT Holding, Inc. ("Mitsui"), a company owned by Mitsui &
Co., Ltd, which holds a 5.0% stake.
The Acquisition to form the "Enlarged Group" is a Class 1
transaction for AVEVA under the Listing Rules of the Financial
Conduct Authority. A combined circular and prospectus containing
further details on the Acquisition, the recommendation of AVEVA's
board of directors (the "Board"), the terms of the proposed rights
issue (the "Rights Issue"), and the notice of the general meeting
of the Company (to be held to approve, amongst other matters, the
Acquisition and to authorise the directors to allot shares in
connection with the Rights Issue and the Acquisition) (the "General
Meeting") (the "Combined Circular and Prospectus") is expected to
be sent to AVEVA shareholders ("Shareholders") in October or early
November 2020.
Schneider Electric SE ("Schneider Electric"), which currently
indirectly holds approximately 60% of the issued ordinary shares of
AVEVA ("Ordinary Shares"), has irrevocably committed to vote in
favour of the Acquisition and fully subscribe for shares pursuant
to the Rights Issue on a pro rata basis.
Subject to satisfaction of the conditions to the Acquisition,
completion of the Acquisition ("Completion") is expected to occur
around the end of the year.
Key Highlights of the Acquisition
The Board expects that the Acquisition will, among other
things:
-- Strengthen AVEVA's position as a global leader in industrial
software, with combined pro forma revenue of c.GBP 1.2 billion and
Adjusted EBIT of c.GBP330 million (c.28% margin) for the Enlarged
Group;
-- Combine the complementary product offerings of AVEVA and
OSIsoft - bringing together industrial software and data management
- capitalising on the technological megatrends that are driving
digital transformation of the industrial world as efficiency,
flexibility, sustainability and resilience become increasingly
urgent requirements for customers:
o OSIsoft's PI System is a very scalable and robust enterprise
level data historian platform, which will be a key enabler of a
number of AVEVA solutions, in particular enhancing the Digital
Twin, HMI/SCADA, Manufacturing Execution System and Asset
Performance, with more inputs and connectivity to feed AI-infused
and cloud-based solutions;
o AVEVA's and OSIsoft's solutions will combine to create a
leading Industrial Internet of Things (IIoT) portfolio, which will
continue to be platform and hardware agnostic, meaning that it will
be able to communicate with diverse devices using different
operating systems;
o The combined solution set will optimise engineering,
operations and performance, with unprecedented efficiency and value
as a result of the integration of both businesses; and
o AVEVA will be able to accelerate the market adoption and
expansion of OSIsoft Cloud Services (OCS) and other cloud-based
offerings, which recently entered into an early adopter program and
provide OSIsoft's industry leading data management capability in a
native cloud environment;
-- Enable AVEVA to broaden and deepen its relationships with
both existing and new customers across the highly complementary,
global customer bases. AVEVA and OSIsoft have a significant shared
customer base, which provides synergies in multiple industries,
enabling product integration and customer value ;
-- Strengthen AVEVA's position in the power & utilities and
chemicals & petrochemicals segments and add stronger positions
in the pharmaceutical, food & beverage and life sciences
segments. AVEVA's industry exposure will also be further
diversified with the oil & gas segment's contribution to pro
forma revenue expected to decrease from c.40% to c.35%;
-- Create cross selling opportunities across the Americas, EMEA
and Asia Pacific, with each region contributing c.41%, c.36% and
c.23%, respectively, to the Enlarged Group's pro forma revenue;
-- Support delivery of AVEVA's medium term targets and enhance
the Enlarged Group's long-term growth opportunity, with OSIsoft's
strong historical growth, recurring revenue and margins closely
aligned with AVEVA's own targets, and significant further upside
through operational leverage, cost and revenue synergies;
-- Create additional value for Shareholders through the
potential for material cross-sell and upsell revenue synergies
owing to the high degree of complementarity between the two product
portfolios and a significantly larger customer base in expanded
geographies and industries;
-- Meaningful cost synergies are expected to be achieved, driven
by operational efficiencies through the optimisation of cost
structures such as elimination of overlaps, increased utilisation
of delivery centres, and integration of corporate and
administrative functions;
-- Create material cash tax savings over a 15 year period as a
result of intangible assets created by the Acquisition that can be
amortised for tax purposes; and
-- Be earnings accretive in AVEVA's financial year ending 31 March 2022, before synergies.
Key terms of the Acquisition
The key terms of the Acquisition include:
-- Acquisition of OSIsoft for an enterprise value of $5.0
billion, on a cash-free and debt-free basis, assuming a normalised
level of working capital, and subject to customary completion
adjustments;
-- $5.0 billion represents a multiple of 32.9x EV / Adjusted TTM
EBIT, broadly in line with AVEVA's multiple;
-- Acquisition is expected to be funded by a combination of a
capital raise by way of the Rights Issue, cash on balance sheet,
new debt facilities and issuing new Ordinary Shares to one of the
selling shareholders, as follows:
o Approximately 12% ($0.6 billion) of the total consideration
will be paid to Estudillo, in newly issued Ordinary Shares 2 , of
which Estudillo will distribute approximately 90% of the shares to
affiliates of Dr. J. Patrick Kennedy and 10% to other shareholders
in Estudillo; and
o Approximately 88% ($4.4 billion) of the total consideration
will be paid in cash, which will be funded by a combination of:
-- c.$3.5 billion from the proceeds of the proposed Rights Issue
3 ; and
-- c.$0.9 billion from existing cash on balance sheet and new
debt facilities, resulting in pro forma net leverage of 1.9x EBITDA
for the Enlarged Group;
-- OSIsoft's founder, Dr. J. Patrick Kennedy, will remain
involved in the business through his appointment to the newly
established (non-Board) role of Chairman Emeritus and ongoing share
ownership of >4 % in the Enlarged Group, in order to support the
delivery of the full strategic, operational and financial benefits
of the Acquisition;
-- PI to be established as a business unit within the Enlarged
Group, and AVEVA plans to establish retention and incentive
arrangements with key OSIsoft management and employees in order to
ensure the continued success of OSIsoft as part of the Enlarged
Group;
-- Completion is conditional upon, among other things,
Shareholder approval of the resolution needed to complete the
Acquisition and to authorise the directors to allot shares in
connection with the Rights Issue and the Acquisition (the
"Resolution") and satisfaction of applicable antitrust and other
regulatory approvals;
-- The Combined Circular and Prospectus is expected to be
published in October or early November 2020 with the proposed
Rights Issue to follow soon thereafter;
-- For the purposes of certain funds in connection with the
Acquisition, AVEVA has entered into a fully committed facilities
agreement with Barclays, BNP Paribas and J.P. Morgan, consisting
of:
o A debt bridge to equity of $3.6 billion (the "Bridge
Facilities") which is not expected to be drawn and will be
cancelled upon receipt of the net proceeds of the Rights Issue;
and
o Fully committed term and revolving facilities which include a
$900 million term loan facility with a maturity of 3 years ("Term
Loan") and a GBP250 million revolving credit facility with a
maturity of a minimum of 3 years ("RCF"); and
-- Schneider Electric, which currently holds approximately 60%
of the issued Ordinary Shares of AVEVA, has irrevocably committed
to vote in favour of the Acquisition and fully subscribe to the
Rights Issue on a pro rata basis. This will deliver the necessary
voting majority for the Resolution to pass.
2 The valuation of the Ordinary Shares of $611 million (GBP467
million) has been calculated by reference to the number of Ordinary
Shares to be issued to Estudillo under the Stock and Unit Purchase
Agreement, being 10.9 million Ordinary Shares, subject to customary
adjustment for the Rights Issue, and the 5-day volume weighted
average price of AVEVA's share price up to the close of trading on
24 August 2020 (the last practicable date prior to publication of
this announcement).
3 The proceeds of the Rights Issue of $3.5 billion to fund the
Acquisition excludes amounts payable for transaction related fees
and expenses.
AVEVA Current Trading
AVEVA continued to see similar trends in the first four months
of FY 2021 to those that were outlined in its first quarter trading
update for the three months to 30 June 2020. Strong growth in
subscription revenue continued, while maintenance revenue was
broadly flat and perpetual licences and services reduced
substantially. This reduction was partly due to AVEVA's ongoing
transition to a subscription business model and partly due to
disruption caused by Covid-19. Overall AVEVA Group organic constant
currency revenue declined 3.7%.
Despite the Covid-19 related disruption, demand for AVEVA's
software has been robust, due to its ability to drive efficiency,
flexibility and sustainability for customers across a wide range of
industries, with particularly good demand for Cloud solutions.
As previously outlined, AVEVA faces a tough comparative period
in the first half of FY 2021, particularly in Asia Pacific, partly
due to the early renewal of a large contract in the prior financial
year. The order pipeline for the remainder of the financial year is
solid and is expected to benefit from large contract renewals in
the second half of the financial year.
Expected Timetable to Completion
The Combined Circular and Prospectus containing further details
on the Acquisition, the recommendation of AVEVA's Board, the terms
of the Rights Issue and the notice of the General Meeting is
expected to be sent to Shareholders in October or early November
2020. Subject to satisfaction of the conditions to the Acquisition,
Completion is expected to occur around the end of the year.
Commenting on the Acquisition, Philip Aiken, Chairman of AVEVA,
said:
"I am delighted that we have reached agreement to acquire
OSIsoft. The acquisition has compelling strategic rationale with
strong operational and financial benefits. The acquisition will
strengthen AVEVA's position as a global leader in industrial
software, whilst a combination of the complementary product
offerings of AVEVA and OSIsoft is expected to allow the Enlarged
Group to accelerate growth and continue to generate significant
shareholder value."
Commenting on the Acquisition, Craig Hayman, Chief Executive of
AVEVA, said:
"The acquisition of OSIsoft is perfectly in line with our
strategic vision and it will accelerate the Enlarged Group's role
in the digitisation of the industrial world, which is being driven
by a need for sustainability, the industrial internet of things,
Cloud, data visualisation and artificial intelligence. The
acquisition will enable AVEVA to broaden and deepen its
relationships with existing and new customers and bring a more
comprehensive product portfolio to market."
Commenting on the Acquisition, Peter Herweck, Vice Chairman of
AVEVA and Executive Vice President, Industrial Automation,
Schneider Electric, said:
"The combination of AVEVA and OSIsoft 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. Schneider Electric is committed to supporting
customers with digital solutions for efficiency and
sustainability."
Commenting on the Acquisition, Dr. J. Patrick Kennedy, Founder
and Chief Executive of OSIsoft, said:
"Joining forces with AVEVA enhances and extends our ability to
deliver on our key commitments to our customers, partners and
employees. Together we will be better able to service the largest
digital transformation projects in history, including across
industry 4.0+ and IIoT. The next chapter in PI's fifth decade will
be exciting for our employees and customers, and I look forward to
my continued involvement as Chairman Emeritus and shareholder."
The information contained within this announcement is considered
by the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No.596/2014. Upon the publication
of this announcement via a Regulatory Information Service, this
inside information will be considered to be in the public
domain.
The person responsible for arranging for the release of this
announcement on behalf of the Company is James Kidd, Deputy CEO and
CFO.
AVEVA will hosting a briefing call for investors and analysts at
08:30 BST today. See below for dial in details or visit
https://investors.aveva.com.
Dial in details:
United Kingdom 0800 640 6441
United Kingdom
(Local) 020 3936 2999
USA 1 855 9796 654
USA (Local) 1 646 664 1960
All other locations +44 20 3936 2999
Access code: 571037
Enquiries:
AVEVA Group plc
Philip Aiken (Chairman)
Craig Hayman (Chief Executive Officer)
James Kidd (Deputy CEO and CFO)
Matt Springett (Head of Investor Relations)
Tel: +44 7789 818 684
Lazard
Financial Adviser to AVEVA
Cyrus Kapadia
Keiran Wilson
Tel: +44 20 7187 2000
Numis Securities
Joint Corporate Broker and Sponsor to AVEVA
Simon Willis
Jamie Loughborough
Jonny Abbott
Tel: +44 20 7260 1000
J.P. Morgan Cazenove
Joint Corporate Broker to AVEVA
Bill Hutchings
Tel: +44 20 7742 4000
FTI Consulting
PR Adviser to AVEVA
Edward Bridges
Dwight Burden
Tel: +44 20 3727 1017
Sources and Bases
1. Where amounts are shown in both US dollars and sterling, or
converted between the aforementioned currencies, in this
announcement, an exchange rate of GBP1.00/US$ 1.307 75 has been
used, which has been derived from data provided by Bloomberg on 24
August 2020.
2. Unless otherwise stated:
-- financial information relating to AVEVA has been extracted or
derived from the audited results for the twelve months ended 31
March 2020; and
-- financial information relating to OSIsoft has been extracted
or derived from the audited results for the twelve months ended 31
December 2019 and the unaudited results for the six months ended 30
June 2020.
3. All OSIsoft financial information in this announcement is
presented in accordance with US GAAP and may be different in the
Combined Circular and Prospectus, which will be prepared in
accordance with IFRS and AVEVA's accounting policies.
4. Adjusted Earnings Before Interest and Tax (EBIT), as used in
this announcement, is calculated where applicable before
amortisation of intangible assets (excluding other software),
share-based payments, gain/loss on fair value of forward foreign
exchange contracts and (save in respect of OSIsoft) exceptional
items.
5. EBITDA, as used in this announcement, is calculated as adjusted EBIT plus depreciation.
6. Combined pro forma financial information is based on twelve
months ended 31 March 2020 for AVEVA and twelve months ended 30
June 2020 for OSIsoft.
7. Combined revenue breakdowns by industry and geography have
been derived from the reclassification of OSIsoft segments in
accordance with AVEVA's segments.
8. Pro forma oil & gas revenues based on AVEVA's approximate
oil & gas revenues in financial year ended 31 March 2020 and
OSIsoft's oil & gas revenues estimated by applying billings by
industry breakdown (breakdown for OSIsoft's financial year ended 31
December 2019) to total revenues for the twelve months ended 30
June 2020.
9. Enterprise value of $5.0 billion has been calculated by
reference to the total of cash consideration and the 5-day volume
weighted average price of AVEVA's share price up to the close of
trading on 24 August 2020 (the last practicable date prior to
publication of this announcement) multiplied by the number of
Ordinary Shares to be issued to Dr. J. Patrick Kennedy, subject to
customary adjustment for the Rights Issue.
10. TTM is defined as trailing twelve months.
11. CAGR is defined as a compound annual growth rate.
12. Certain figures in this announcement have been subject to rounding adjustments.
Important Notices
This announcement is an announcement and not a circular or
prospectus or equivalent document and prospective investors should
not make any investment decision on the basis of its contents. The
Combined Circular and Prospectus in relation to the transaction
will be published in due course. Nothing in this announcement
constitutes an offer of securities for sale in any
jurisdiction.
This announcement contains statements about AVEVA that are or
may be forward looking statements. All statements other than
statements of historical facts included in this announcement may be
forward looking statements. Without limitation, any statements
preceded or followed by or that include the words "targets",
"goals", "should", "would", "could", "continue", "plans",
"believes", "expects", "aims", "intends", "will", "may",
"anticipates", "estimates", "hopes", "projects" or words or terms
of similar substance or the negative thereof, are forward looking
statements.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements. Due to such uncertainties and risks, readers
are cautioned not to place undue reliance on such forward looking
statements, which speak only as of the date hereof. AVEVA disclaims
any obligation to update any forward looking or other statements
contained herein, except as required by applicable law or
regulation.
This announcement is for informational purposes only and is not
an offer of securities for sale in any jurisdiction where to do so
would be unlawful. Securities may not be offered or sold in the
United States absent registration under the US Securities Act of
1933, as amended (the "US Securities Act"), or an exemption
therefrom. The securities referred to herein have not been and will
not be registered under the US Securities Act or under the
securities laws of any state or other jurisdiction of the United
States, and may not be offered or sold, taken up, resold,
transferred or delivered in the United States except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the US Securities Act and in
accordance with any applicable securities laws of any state or
other jurisdiction of the United States.
Lazard & Co., Limited ("Lazard"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively as financial adviser to AVEVA and no one else
in connection with the possible acquisition referenced above and
will not be responsible to anyone other than AVEVA for providing
the protections afforded to clients of Lazard or for providing
advice in relation to the proposed Acquisition or any other matters
referred to in this announcement. Neither Lazard nor any of its
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of Lazard in connection with this announcement, any statement
contained herein, the possible acquisition or otherwise.
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively as joint corporate broker to AVEVA and no one
else in connection with the proposed Acquisition or any other
matter referred to in this announcement and will not be responsible
to anyone other than AVEVA for providing the protections afforded
to its clients nor for providing advice in relation to the
Acquisition or any other matter referred to in this announcement.
Neither Numis nor any of its subsidiaries, branches or affiliates
owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person who is not its client in
connection with this announcement, any statement contained herein,
the Acquisition or otherwise.
J.P. Morgan Securities plc, which conducts its UK investment
banking activities as J.P. Morgan Cazenove ("JPM") and which is
authorised by the Prudential Regulation Authority and regulated in
the United Kingdom by the Financial Conduct Authority and the
Prudential Regulation Authority, is acting exclusively as joint
corporate broker to AVEVA and no one else in connection with the
proposed Acquisition or any other matter referred to in this
announcement and will not be responsible to anyone other than AVEVA
for providing the protections afforded to its clients nor for
providing advice in relation to the Acquisition or any other matter
referred to in this announcement. Neither JPM nor any of its
subsidiaries, branches or affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any
person who is not its client in connection with this announcement,
any statement contained herein, the Acquisition or otherwise.
Ashurst LLP and Debevoise & Plimpton LLP are acting as the
lead legal advisers to AVEVA in connection with the
transaction.
OSIsoft's financial adviser in the transaction is Morgan Stanley
and Co. LLC and its legal counsel in the transaction is Fenwick
& West and Slaughter and May.
APPIX I
HISTORICAL FINANCIAL PERFORMANCE OF OSISOFT
$ million, ASC 605 ASC 606
Dec Y/E
FY16 FY17 FY18 FY19 CAGR FY19 H1 19 H1 20 H1 20 TTM
Growth June-20
----- -----
Billings 366.4 431.8 443.8 482.8 9.6% 482.8 174.7 196.7 12.6% 504.7
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
Revenue 353.1 378.7 438.6 465.9 9.7% 470.0 186.5 205.0 10.0% 488.5
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
Gross Profit 281.1 296.8 353.8 372.0 9.8% 376.1 139.8 160.4 14.8% 396.7
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
Margin 79.6% 78.4% 80.7% 79.8% - 80.0% 75.0% 78.2% 81.2%
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
Operating
Costs 201.8 230.1 240.4 244.4 6.6% 241.5 120.5 115.3 (4.3%) 236.3
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
EBITDA 79.3 66.7 113.4 127.6 17.2% 134.6 19.3 45.1 133.5% 160.4
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
Margin 22.5% 17.6% 25.9% 27.4% 28.7% 10.4% 22.0% 32.8%
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
Adj. EBIT 72.3 62.5 106.7 120.2 18.5% 127.2 16.9 41.9 147.7% 152.2
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
Margin 20.5% 16.5% 24.3% 25.8% - 27.1% 9.1% 20.4% 31.2%
----- ----- ----- ----- ----- ----- ----- ----- ------- --------
As of 31 December 2019, OSIsoft had gross assets of $364.6
million and net assets of $126.3 million.
Notes
OSIsoft's FY16-FY19 figures shown above are according to ASC 605
revenue recognition policies. FY19 and H1 19 figures are shown as
restated according to ASC 606. H1 20 and TTM ended 30 June 2020
figures are shown according to new ASC 606 policies.
All OSIsoft financial information in this announcement is
presented in accordance with US GAAP and may be different in the
Combined Circular and Prospectus, which will be prepared in
accordance with IFRS and AVEVA's accounting policies.
Operating costs calculated as gross profit less EBITDA.
APPIX II
DETAILS OF THE PROPOSED ACQUISITION OF OSISOFT
Stock and Unit Purchase Agreement
On 25 August 2020, the Company, AVEVA US 1 Corp. and AVEVA US 2
Corp., Delaware corporations and indirect wholly owned subsidiaries
of the Company (together, the "Purchasers"), OSIsoft, Mitsui,
Softbank and Estudillo (Estudillo, together with Mitsui and
SoftBank, being the sellers) entered into a stock and unit purchase
agreement (the "SUPA"), pursuant to which the Company and the
Purchasers have agreed, subject to the terms and the conditions of
the SUPA, to acquire, directly or indirectly, all of the issued and
outstanding units of OSIsoft.
The consideration for the Acquisition will comprise: (i) the
payment of $4.4 billion in cash consideration; and (ii) the
allotment and issuance by AVEVA of 10.9 million consideration
shares in respect of a portion of the consideration payable to
Estudillo, subject to certain customary adjustments and payments to
reflect that the Acquisition will be made on a cash-free, debt-free
basis and on the basis of a normalised level of working capital at
Completion. Following Completion, and while Dr. J. Patrick Kennedy
has a legal or beneficial interest in 3% or more of the share
capital of AVEVA (including through Estudillo), each of Dr. J.
Patrick Kennedy and Estudillo will consult with AVEVA and its
brokers prior to any offer or disposal of Ordinary Shares.
Completion of the Acquisition is conditional upon satisfaction
of certain conditions, including the approval of Shareholders at
the General Meeting and the receipt of antitrust and CFIUS
approvals. The SUPA contains customary representations, warranties,
covenants and pre-Completion undertakings.
The Company will be required to pay a termination fee of $85
million to OSIsoft if the SUPA is terminated due to either: (a)
Completion not having occurred by 20 December 2020 as a result of
Shareholder approval, antitrust approvals or CFIUS approval not
having been obtained or governmental orders having prevented
Completion (the "Conditions"), provided that such date will be
extended to 31 March 2021, and subsequently to 30 June 2021, where
any of the Conditions (other than the Shareholder approval
condition) have not been satisfied (without regard being had to the
satisfaction or otherwise of the Shareholder approval condition);
or (b) a government authority having prohibited the Acquisition by
way of a final non-appealable order under an antitrust law or
issued by CFIUS, provided that, in either case, at the time of such
termination all other conditions to AVEVA's obligations to effect
the Acquisition have been satisfied or would have been satisfied at
Completion, and OSIsoft has not committed a material breach of the
SUPA which was the principal cause of Completion not having
occurred and the SUPA being terminated.
Facilities Agreement and Schneider Electric Guarantee
AVEVA has entered into an English law governed facilities
agreement with certain lenders and Barclays Bank PLC as agent (the
"Facilities Agreement"), pursuant to which the lenders have made
available to AVEVA and certain of its subsidiaries $3.6 billion of
debt under the Bridge Facilities, a $900 million term facility and
a GBP250 million revolving credit facility, each of which may be
used to finance the cash consideration component of the
consideration. The Bridge Facilities are not expected to be drawn
and will be automatically cancelled upon receipt of the net
proceeds of the Rights Issue.
The Facilities Agreement is unsecured, however indebtedness
under the Facilities Agreement is guaranteed by certain
subsidiaries of AVEVA. In addition, under an English law governed
guarantee entered into on 25 August 2020, Schneider Electric has
irrevocably and unconditionally agreed to guarantee the obligations
of the borrowers, as they concern payment of principal and
outstanding interest, in respect of $2.2 billion of the Bridge
Facilities. This amount is equivalent to the proceeds receivable
from Schneider Electric's pro rata entitlement of the Rights Issue.
The Schneider Electric guarantee shall terminate on the date on
which the guaranteed obligations have been discharged in full and
the lenders are under no further obligation to provide financial
accommodation under the relevant Bridge Facility. AVEVA and certain
of its subsidiaries have agreed on a joint and several basis to pay
and reimburse Schneider Electric for the full amount of any
payments made by Schneider Electric under the guarantee.
Schneider Electric Irrevocable Undertakings
Schneider Electric has irrevocably agreed to vote (or cause to
be voted) its Ordinary Shares, which constitute approximately 60%
of the issued and outstanding Ordinary Shares of AVEVA as of the
date hereof, in favour of the Resolution approving, among other
things, the Acquisition, at the General Meeting, pursuant to a
voting and support agreement between Schneider Electric, OSIsoft
and the Company entered into on 25 August 2020. Schneider
Electric's obligations shall not apply if there is a governmental
order which prohibits the carrying out of the above actions.
Schneider Electric has also irrevocably committed to take up (or
cause to be taken up) its entitlement to subscribe for shares
pursuant to the Rights Issue, pursuant to an equity financing deed
between Schneider Electric, AVEVA, J.P. Morgan Securities plc, as
the lead arranger of the Facilities Agreement (the "Arranger"),
Barclays Bank PLC, BNP Paribas Fortis SA/NV and Numis Securities
Limited entered into on 25 August 2020 ("Equity Financing Deed").
The Equity Financing Deed provides each of the banks thereto a
right to enforce the undertaking in the event that Schneider
Electric has not done so by 12.00 p.m. on the third business day
before the latest time for acceptance and payment pursuant to the
terms of the Rights Issue.
Schneider Electric has agreed that it will not dispose of, or
enter into an agreement to dispose of, its Ordinary Shares in the
Company until dealings in the Rights Issue shares (fully paid) have
commenced.
Cooperation Agreement
On 25 August 2020, AVEVA and Schneider Electric entered into a
cooperation agreement recording the steps which AVEVA and Schneider
Electric have agreed to take in relation to Completion and certain
obligations which each party has agreed in favour of the other
relating to the Acquisition (the "Cooperation Agreement").
The Cooperation Agreement provides, amongst other matters, that
AVEVA shall use its reasonable best efforts to cancel (if undrawn)
or prepay (if drawn) the portion of the Bridge Facilities
guaranteed by Schneider Electric in full prior to the latest
applicable termination date under the Facilities Agreement, and
that Schneider Electric will assist AVEVA and its advisers as
reasonably requested in connection with any filings with applicable
governmental authorities deemed necessary or advisable as a result
of the Acquisition.
Seller Non-Competition Agreement
The seller non-competition agreement ("Seller Non-Competition
Agreement") was entered into on 25 August 2020 between AVEVA,
OSIsoft and Dr. J. Patrick Kennedy. Pursuant to the Seller
Non-Competition Agreement, Dr. J. Patrick Kennedy has agreed that,
for a three-year period following Completion, he will not (and
shall cause his controlled affiliates not to) directly or
indirectly, among other things, operate, control or engage in any
business competing with any member of the OSIsoft Group throughout
the United States and any country in the world if the OSIsoft Group
is conducting or has undertaken material planning to conduct
business in such country as of Completion.
The Seller Non-Competition Agreement also contains
non-solicitation (in respect of employees and business
connections), non-hiring and non-disparagement obligations.
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END
ACQKKPBQPBKKFFB
(END) Dow Jones Newswires
August 25, 2020 02:00 ET (06:00 GMT)
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