Shares in the engineering software maker Aveva have fallen by more than a third after it scrapped a complex tie-up with France’s Schneider Electric that would have reduced the UK company’s exposure to troubled oil and gas markets.

The companies agreed a deal in July in which Schneider was to buy £550m of new Aveva shares for a 53.5% stake and combine Aveva’s business with Schneider’s software division.

The agreement, effectively a reverse takeover of Aveva, would have left it less vulnerable to the tumbling price of oil. Aveva makes programmes to design oil rigs, ships and nuclear power stations and some analysts have said the oil price influences about three quarters of its revenue.

While inspecting each other’s businesses, the companies found obstacles to a combination that made the deal too risky and expensive, Aveva said. These problems were compounded by the financial complexity of the proposed arrangement.

“As a result, the board has determined that the anticipated uplift in shareholder value was unlikely to have been realised to the extent previously considered,” Aveva said.

Shares in Aveva, founded in 1967 as a spin-off from Cambridge University, fell 36% to £13.87. The shares hit a then four-year high of £23 when the deal was announced and reached £23.20 earlier this month.

Aveva said its trading was in line with the board’s expectations and that its outlook for the year ending in March was unchanged. The terms of the deal were not binding and no break fee is payable by either side, it added.

Oil companies and businesses that feed off the industry have slashed spending to cope with the plunging oil price, which has fallen by about two-thirds since summer 2014 because of slowing demand and a glut of supplies.

Some analysts think the price could halve again from less than $40 a barrel to $20. The price of Brent crude fell 15 cents to $37.77 on Tuesday and was heading for its eighth day of declines as mild winter weather exacerbated existing fears to send prices close to 11-year lows.

Julian Yates, an analyst at Investec, said another bidder might emerge for Aveva but that the fraught oil market could put off potential acquirers.

“It is disappointing that the deal has broken down as in our view, this seemed the logical next strategic step for the business, considering the pressures in its core market and the greater critical mass Aveva would have garnered,” he said. “We imagine there will be hopes that another suitor will step forward. Aveva is a quality asset, but one where trading is under pressure.”