AVEVA weighing acquisitions and cashback

We’ve been watching AVEVA’s share price climb on the London Stock Exchange and wondered why. The company hasn’t reported financials, no massive new wins have been announced, economic news is looking up but isn’t great… But now we have a clue: According to Investors Chronicle, AVEVA Group is actively searching for an acquisition but may return cash to investors if it can’t find something suitable by next March.

In the article, AVEVA’s CEO Richard Longdon says that he is "still looking" despite unrealistically high expectations by acquisition candidates. "If we can’t do something by the end of the financial year, we will look at giving some cash back in some form or another," says Mr Longdon.

And that could mean a lot of cash to stockholders of record. AVEVA has said it needs roughly GBP 40 million in cash for operations, a fraction of the GBP 126 million in cash on hand at the end of March. Returning over GPB 80 million would boost the dividend well above the 9.36 pence paid last fiscal year

It’s a tough call, one that several cash-rich PLM companies face: hold on to the cash in hopes of a better acquisition somewhere down the line, hold on to cash in case the economy worsens and it’s needed for operations (not likely in AVEVA’s case, since it so far exceeds operating needs) or give it to shareholders?