Stuttgart, Germany-based RIB Software, which has been expanding its footprint in the architecture, engineering and construction (AEC) Software-as-a-Service space in recent years, is the subject of a €29 per RIB share from Schneider Electric, valuing the 1200-strong company at around €1.4 billion (c. £1.16 billion or US$1.52 billon).
A French multinational corporation with annual global revenues in 2018 of almost €26 billion (c £21bn or US$28bn), Schneider Electric specialises in electrical equipment (building automation, home automation, industrial safety and control systems, electric power distribution, electrical grid automation, Smart Grid, power and cooling for datacentres, etc), but has also been growing its software and data capabilities. In 2010, it invested, with Alstom, in a €70 venture capital fund, Aster, to support innovative start-ups in the fields of energy and the environment; from 2015, it began to focus on the ‘Internet of Things’ (IoT), sustainability and efficiency, and introduced an IoT-enabled architecture and platform, EcoStruxure (which, like RIB’s MTWO platform, uses Microsoft Azure); and in 2017, it acquired the Cambridge, UK-based AVEVA Group, a provider of engineering and industrial software.
RIB has been expanding its AEC operations beyond its central European heartland for some years, while also growing its SaaS capabilities and extending beyond its core estimating foundations. In 2012, it acquired an Australian AEC SaaS document collaboration business ProjectCentre plus a US estimating software provider MC² (post), and two years later acquired Denmark’s AEC SaaS business Docia, looking to expand into cloud-based facilities management as well as project delivery (post), while also growing its SaaS revenues (post).
When Extranet Evolution interviewed RIB’s COO and executive board member Mads Bording (right, also former CEO of Docia) in London in 2018 (RIB plans further cloud expansion), he talked about the group’s plans to expand internationally (mentioning China, for example) and to grow the cloud-delivered construction ecosystem, MTWO, it was developing in partnership with Microsoft. This was extending the reach of RIB’s core product – “an integrated 5D BIM solution” – which could be flexibly deployed via the cloud, as an on-premise solution, or as a private cloud or a multi-tenant architecture. An April 2018 fund-raising round raised €131m which was earmarked for acquisitions, and 2019 saw 14 planned deals extending RIB’s global reach (resellers in the UK, Australia and Africa), its technological capabilities (building specification data, IoT, AI and BI), and its SaaS revenues (already up 33% in 2018).
Total RIB Group revenues were up 57% in 2019 to €214.3m – c £178m or US$232m – (news release), generating an EBITDA of €50.1m (32% up on 2018), while the group’s target of achieving 30,000 users of MTWO and iTWO 4.0 was exceeded by over 100% with 69,265 users. The company says 2020 revenues will be in the range of €270m to €310m with an EBITDA of €57m to €65m, and plans between 10 and 20 further M&A deals during 2020. In January 2020, RIB invested in US-based VIM AEC (post).
On 13 February 2020, Schneider Electric announced its intention to launch a voluntary public tender offer to the shareholders of RIB in accordance with German takeover laws. The offer price of €29 per share represented a premium of over 50% on the volume-weighted 12-month average share price prior to the announcement and of 41% on the last closing price. RIB’s management team is supportive of the proposed deal, content that the two companies can “create a global leader in digital and sustainable smart building solutions” and that, “as a strategic partner Schneider Electric will actively support the development of RIB”.
RIB chairman and CEO Tom Wolf says:
“We are pleased to have found in Schneider Electric a strategic partner who shares our vision to revolutionize the global construction industry and to create a carbon-free and sustainable living space for our children and grandchildren. Schneider is the global leader in digital transformation of energy management and automation, enabling efficiency and sustainability for its customers.
As the current main shareholder, I have decided to offer my shares to Schneider Electric at the offer price, as a clear signal of confidence in their attractive offer, which I fully support in the interest of RIB Software and all RIB shareholders. However, at the request of Schneider Electric, the current management team will continue in their positions, and Michael Sauer (CFO) and I will retain a combined shareholding of approx. 8.7%.
Due to the uncertainties in today’s world I welcome a strong, long-term oriented, strategic partner in Schneider Electric. We understand that we only can reach a carbon free future if we join our forces today.”
The Extranet Evolution view
The ‘fit’ between Schneider Electric and RIB appears strong. The French giant, following its AVEVA deal, has a strong foothold in industrial applications covering the whole asset lifecycle, but is less strong in the building construction sector, where RIB has built a significant foothold. And both have established partnerships with Microsoft to use its Azure platform.
However, this remains a competitive sector. AEC design authoring vendors such as Autodesk and Bentley have also been expanding their portfolios to better support construction delivery processes. In late 2019, Autodesk launched its Construction Cloud, consolidating some of its construction-oriented acquisitions alongside existing BIM toolsets, while Bentley has been investing in 4D BIM, acquiring Synchro in 2018, and taking a leadership position (also with Microsoft Azure) in pushing IoT-enabled ‘digital twins’ (read Bentley pushes ‘Digital Twin’ into AEC mainstream, August 2019) – the Schneider-RIB graphic clearly envisages a joint product / service offering in this respect too. (Interestingly, Bentley, Microsoft and Schneider collaborated on a digital twin/IoT project at Microsoft’s regional headquarters at Frasers Tower in Singapore office.)
The Bentley parallels are particularly interesting. Amid occasional speculation about an initial public offering of the firm’s shares, the US firm has also been cultivating a strategic relationship with Germany’s Siemens – which operates across some of the same markets as Schneider Electric – since 2016 (post), with Siemens building a 9% holding in Bentley’s voting stock by early 2018 (post). And on the same day as Schneider’s RIB bid, Bentley submitted a registration statement with the US Securities and Exchange Commission for a proposed public listing of its Class B Common Stock (13 February 2020 press release).
Assuming this deal is concluded, it will be the second acquisition of an AEC SaaS player since I suggested six potential targets in April 2018 (read: The next big AEC SaaS acquisition?). Six months later, Hexagon acquired Bricsys (mainly a design/BIM authoring vendor but with a complementary SaaS platform, Bricsys 247). Two of the others have both recently published rosy financial results: Germany’s thinkproject (thinkproject grows revenues 25% in 2019) and London-based Asite (Asite revenues up 20% in 2019).