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Time is right to combine the two companies: Schneider Electric CEO

Market is more stable for deal than in 2015: Schneider Electric CEO
Market is more stable for deal than in 2015: Schneider Electric CEO

The deal between Aveva Group and Schneider Electric may be finally here after two false starts, however the CEO of Schneider Electric believes there are now three reasons why investors should feel confident about the deal this time around.

"I believe in this case, in the third period, things are different," Jean-Pascal Tricoire, Schneider Electric's CEO and Chairman told CNBC Tuesday.

"We have signed, we have committed, so the prospectus of the argument will be published this week and then it goes into a process of merger of Aveva and the software division of Schneider, and I think the things that have changed are very simple."

"First point, the teams have worked hard on both sides to make sure that they are completely ready for a merger, which was probably not the case two years ago."

"Secondly, the markets are more stable, I mean when we started the discussion in 2015, there were big instabilities in the market of mining and oil and gas, which today – I wouldn't say they are the most stable markets in the world – but there is more visibility, more predictability."

"Third point, the teams know each other much better, so they feel much more comfortable to work together."

"I will add one thing, in the meantime, in the past two years the digitization, of manufacturing, of the planned space has become really priority on the agenda of many of our customers, so, therefore, the time is right for creating this combination of two companies that can propose a fully integrated, digital life cycle for industrial players."

Schneider Electric CEO: See many synergies between teams
Schneider Electric CEO: See many synergies between teams

On Tuesday, Aveva Group announced that the London-listed engineering software provider had reached an agreement to merge with Schneider Electric's software business arm.

A deal which the companies saw as establishing a "global leader in engineering and industrial software", which would have an "unmatched breadth of product offering".

France's Schneider Electric is expected to take a 60 percent stake in the enlarged group's stock under the terms of this deal, with the combination being classified a reverse takeover, the companies added. The enlarged Aveva Group stock is expected to remain listed on the London Stock Exchange.

According to Reuters, creating this "global leader" in industrial software could make it worth about or even more than £3 billion ($3.89 billion).

The news marks the company's third and successful attempt to combine the companies, with both groups announcing a termination of discussions in both 2016 and 2015.

Schneider Electric: We’ll try to hire new CEO by deal closing
Schneider Electric: We’ll try to hire new CEO by deal closing

Following the announcement, shares in the London-listed Aveva Group soared 26 percent and above, in afternoon trade, while response to the share price in Schneider Electric was rather muted.

Reacting to the market movements on Tuesday, Tricoire said it wasn't surprising that there was a lift in Aveva's shares, adding that the company saw a "lot of synergies in between the teams" when it comes to technology, market coverage, and geographical coverage.

"We believe that this operation will be value creative for the two companies," the chairman said, adding that this combination of the two groups was about growth, on development and more technology.

"We want to develop faster thanks to the combination of our forces."

Correction: This story has been updated to reflect that the newly created company would be worth more than £3 billion, according to Reuters.