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Emerson chases Rockwell with $29 billion offer

Written by  Karen Boman Thursday, 16 November 2017 08:44

St. Louis-based technology firm Emerson Electric has once again offered to buy Milwaukee-based Rockwell Automation, this time proposing to acquire all of Rockwell’s outstanding shares in a deal valued at $29 billion.

David N. Farr. Source: Emerson

Chairman and Chief Executive David N. Farr made the offer in a 16 November letter sent to Rockwell President and CEO Blake D. Moret. Under the proposed deal, Emerson would acquire all of Rockwell’s outstanding shares at $229/share, including $135/share cash and $90/share of Emerson shares. This represents an attractive 30% premium to Rockwell’s undisturbed 90-day volume weighted average share price as of 30 October, the day before Emerson’s prior acquisition proposals became public, Farr said.

Over the past several months, Emerson has attempted to engage with Rockwell privately regarding a combination of the two firms.

“The industrial logic for this combination is clear,” Farr stated in the letter. “A combination of Emerson and Rockwell would create a leader in the $200 billion global automation market. Together, we could offer an unmatched technology portfolio that addresses customers’ current and future needs for a fully connected enterprise, where process, discrete, and hybrid work seamlessly together rather than relying on single, disparate platforms.”

Farr said that Emerson and its advisors are confident the transaction would meet all necessary approvals, and don’t anticipate any material antitrust or other regulatory issues that would delay closing the deal. He added that Emerson has already received positive feedback from many global customers about the potential market benefits of the merger.

Rockwell confirmed receiving the revised unsolicited proposal, which the company’s board of directors will carefully review to determine if the offer is in the best interest of the company and shareholders.  The board expects to respond to Emerson's proposal in due course, Rockwell said in a 16 November press statement.

Rockwell reported on 31 October that it rejected an unsolicited proposal for Emerson to acquire Rockwell at $107.50/share in cash and 225 million shares of Emerson common stock. That proposal, made 10 October, followed an unsolicited 2 August proposal from Emerson to buy Rockwell for $200/share, with approximately half of the consideration in cash and half in Emerson common stock.

Both companies provide automation technology to a number of industries, including oil and gas. Last month, Emerson announced it would acquire Paradigm, a provider of software solutions to the oil and gas sector, for $510 million. Emerson said the Paradigm acquisition would enable it to better help oil and gas operators increase efficiency, reduce costs and improve return on investment.

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