A bid battle has broken out over the Australian industrial software supplier, Citect. Last October, Schneider Electric launched a AU$71m takeover bid which was initially accepted by the Citect board.

But then, in early January, a US equity investment firm, Thomas Cressey Equity Partners (TCEP) made a counterbid of $1.70 cash per Citect share, representing a premium of about 10% over Schneider`s offer of $1.50 per share and $0.05 divided per share.

Citect`s board decided to recommend that its shareholders and options-holders reject the Schneider offer, and accept TCEP`s higher bid.

Then, in late January, Schneider made an improved offer, of $1.85 cash per share in addition to the original $0.05 dividend per share. The new offer represents a premium of 11.8% over the TCEP bid and values Citect at around AU$100m (about £42m).

The Citect board is now recommending that shareholders vote in favour of the improved Schneider bid "in the absence of a superior proposal".

Schneider says that its higher bid reflects improvements in Citect`s recent results and confidence that it can "leverage the integration of Citect`s SCADA and MES software suite as a core component of its present industrial automation offer". Schneider expects that the acquisition will still meet its return-on-capital-employed criteria.

The takeover deal is subject to several conditions, including a requirement that at least 75% of shareholder votes are cast in favour of the takeover.

In 2004, Citect generated revenues of €38.2m and employed 350 people.

• Schneider Electric has also announced that it is selling its Num numerical control subsidiary to the French manufacturing group, Verdoso. Schneider says that the sale of Num, which generated sales worth €48.8m last year, fits in with its strategy of focusing on core activities in which it has a critical mass. Verdoso says it is committed to ensuring a sustainable future for Num and plans to develop the business using the existing management team`s skills and capabilities.