France’s Schneider Electric SE (www.se.com/ww/en) has agreed to merge with Cambridge-based Aveva Group, which provides engineering software (www.aveva.com).

Under the deal, Schneider will fold its software assets into Aveva’s operations and pay the UK company more than £550 million for a 60% stake in the combined entity. Aveva would also distribute £100 million to shareholders, following the deal’s completion.

The companies are combining in order to compete with industrial giants like Siemens, General Electric and Robert Bosch, which are now developing software platforms and automation tools to sell to other industrial players.

Jean-Pascal Tricoire, Schneider’s chief executive, said: “Through increased scale and complementary footprints, this transaction will generate synergies that will benefit customers and shareholders alike.”

Spun out of Cambridge University in 1967, Aveva provides engineering software to sectors including power, oil and gas, marine and chemicals; it employs more than 1,700 people in 30 countries.

The deal comes at a time when Aveva is trying to reduce its reliance on the slowing oil and gas and marine markets. The company will maintain its listing on the London Stock Exchange and will remain headquartered in Cambridge.