Shares in Aveva surged almost 25% in early trading on Tuesday (5 September), after the UK engineering group announced plans to merge with the software division of French giant Schneider Electric.

The deal, which will create a company worth approximately £3bn and will be completed by the end of 2017, is a case of third time lucky, as over the last three years Schneider has twice tried to merge with Aveva.

Under the terms of the agreement, the French conglomerate, which operates in over 100 countries around the world, will acquire a 60% majority stake in the British group, which will remain listed on the FTSE 250 and will retain its base in Cambridge.

Schneider will pay £550m or 858p per Aveva share. The latter has recommended the deal to its shareholders, who will see the £550m paid by Schneider and £100m in excess cash from Aveva redistributed among them once the merger is completed.

The newly-created group will cover a wide range of industries, from oil and gas to the chemicals and beverage industries and will also see Schneider's exposure to the North American market complement Aveva's existing areas of business across the world.

"We are delighted to have reached agreement [...] with the Schneider Electric software business," said Philip Aiken, chairman of Aveva. "The transaction will be transformational to Aveva, creating a global leader in industrial software, which will be able to better compete on a global scale.

"Aveva will significantly expand its scale and product portfolio, increase its capabilities in the owner operator market, diversify its end user markets and increase its geographic exposure to the North American market, in line with our strategic goals."

Jean-Pascal Tricoire, chairman and CEO of Schneider Electric added: "We believe that through increased scale and complementary footprint, the transaction will generate synergies that will benefit customers and shareholders alike."

Aveva also confirmed that James Kidd, its current CEO, will remain in his role until a replacement is found, before moving onto the role of deputy CEO and chief financial officer.