Shares in the engineering software specialist AVEVA Group PLC (LON:AVV) tanked in early trade after talks that could have led to it being taken over were summarily terminated.
The UK firm, valued at just over £1bn, had been in discussions with Schneider Electric, the French multi-national.
The stock market missive was short and to the point: “Following the termination of the preliminary discussions between AVEVA Group and Schneider Electric, AVEVA has applied to the UK Listing Authority for the suspension of its shares to be lifted.”
The stock fell around 15% to £15.93.
The companies had resumed negotiations after previous talks collapsed back in December.
The transaction then was a complicated one.
AVEVA was considering swapping a majority stake in the business for Schneider’s industrial software arm.
The deal terms at that point, including a control premium, were reported to be £550mln for just over 53% of AVEVA – the equivalent of 850p a share.
The French giant already owns Invensys, the engineering IT group it bought in 2013 for £3.4bn in cash and paper.
Meanwhile, AVEVA is trying to reduce its reliance on the oil and gas sector.
Its annual results last month provided more than a hint as to its problems as they revealed a 46% fall in pre-tax profits to £29.4mln.
In a note entitle ‘Well So Much for That’, Panmure Gordon analyst George O’Connor said he doubted there would be third round of negotiations as he downgraded his stock recommendation to ‘hold’ from ‘buy’.
He told investors: “So Aveva is left to its own devices – and the structural weaknesses in the firm’s business model, as highlighted by this deal, remain unaddressed.
“Investors will have to put up with Aveva grinding it out.”