French energy giant Schneider Electric has cancelled the intended deal, which involved the acquisition of UK-based engineering software provider Aveva Group.

The French firm had announced about the possible takeover in July, which would have entitled it to own a controlling 53.5% stake in Aveva for an investment of £550m.

The stake is valued at £1.3bn at current market prices.

The complex deal would have also turned Aveva into the owner for Schneider’s industrial software unit, Schneider Software.

"The previously announced terms of the transaction were non-binding and as a result no break fees are payable by either party."

Aveva has cited unanticipated costs and risks related to the proposed merger for termination of the deal.

Aveva said: "During the due diligence process significant integration challenges were identified that could not be overcome without considerable additional risk and cost.

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"This was exacerbated by the highly complex structure of the proposed transaction.

"The previously announced terms of the transaction were non-binding and as a result no break fees are payable by either party."

Schneider Electric said: "The two parties have decided to stop their discussions by mutual consent as no agreement could be reached on the terms of transaction."

The firms had previously termed the tie-up to be based on a ‘clear and compelling industrial logic and strategic rationale.’

Aveva chief executive Richard Longdon was quoted by the Financial Times as saying: "The sad thing is the industrial logic was always good and still is. But they say that time kills deals. Too much time had gone on."