The cash and stock deal would value Aspentech at approximately $160 per share.
The combined company’s offerings will be used by customers for everything from designing industrial systems to running, repairing and analyzing them. Companies from oil drillers to life-sciences startups are pouring billions of dollars into software to drive efficiency, providing Emerson and other established industrial concerns new avenues of growth.
Bedford, Mass.-based Aspentech builds software, streamlines engineering and maintenance processes for companies in industries including chemical, mining and energy. It had nearly $700 million in revenue for its fiscal year that ended in June.
Emerson, a large industrial conglomerate, is based in St. Louis. This Ridgid manufactures products ranging from pipe wrenches to software for power plants and has a market value of about $58 billion after a sharp rise in stock since early last year.
The deal covers two smaller businesses from Emerson’s automation arm, which makes software and systems for manufacturers, oil producers and utilities and accounted for about two-thirds of the company’s revenue last year. Business OSI Inc. which Emerson bought last year for $1.6 billion, and geological simulation software. Their share in the annual revenue of the automation segment is about $ 300 million, which is about $ 12 billion.
Emerson, which is contributing approximately $6 billion in cash as part of the deal, will own 55% of the new entity on a fully diluted basis. Aspentech’s shareholders will own the rest.
The price represents a 27% premium to Aspentech’s closing share price before the two companies were in talks, Businesshala reported last week. Aspentech shares closed at $141.55 on Friday.
The new entity will retain the Aspentech name and will be headed by its Chief Executive Officer, Antonio Pietri.
There has been a business partnership between the companies since 2018. Mr. Pietri and Emerson CEO Lal Karsanbhai said in interviews that they outlined the deal at an Italian dinner in Boston’s North End in July, concluding that a combined company might be in a better position going forward. takeover
“We believe that as an industrial, and a significant software business, there is ample opportunity for us to really expand into other areas,” said Mr. Karsanbhai.
Mr. Karsanbhai, an Emerson veteran, previously headed the company’s automation segment and took the top position about eight months ago. He replaces longtime CEO David Farr, who retired earlier this year after 21 years to lead the company and guide it through the early days of the coronavirus pandemic.
Last August, Mr. Farr founded OSI, or Open Systems International Inc. which expanded Emerson’s power-station-management software into renewable-energy sources, an important part of the industry.
The remainder of Emerson’s business will include climate control, such as heating- and air-conditioning equipment, and appliances and home products such as thermostats and garbage disposals, along with the rest of its automation division.
Industrial companies have delivered a steady stream of deals over the past decade as they reconfigure themselves to suit evolving technology and investor preference for narrowly focused companies. giant conglomerates like General Electric Co.
and United Technologies Corporation
Remaking themselves and making big pushes in technology.
In a similar move to Emerson, in 2018 rival Schneider Electric SE merged its industrial-software business with Aveva Group plc in a deal worth about $4 billion.
This is a boom time for mergers in general, as companies with rising stocks and ample cash seek deals that spur growth and profitability. According to Dealogic, in the US, companies have made acquisition deals worth more than $2 trillion so far in 2021, more than double the pace a year ago.
Cara Lombardo [email protected] . Feather