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Industrial software maker Emerson Electric Co (NYSE: Chart EMR - $85.59 0.65 (0.765%) ) will merge two of its businesses with smaller rival, Aspen Technology Inc (Nasdaq: Chart AZPN - $217.78 0.60 (0.276%) ), in a deal worth $11 billion.
The cash-and-stock transaction announced Monday values AspenTech at about $160 per share, a 27% premium to its Oct. 6 close, before Bloomberg News first reported on talks between the two companies.
According to the companies, AspenTech shareholders will receive $87.00 and 0.42 share of the new company for each share they currently own. Emerson would own 55% of the new company, while AspenTech shareholders would own the rest.
After the deal’s expected close in the second quarter of 2022, the new entity would retain AspenTech’s name and would be led by its current chief executive officer, Antonio Pietri.
On Monday, the companies touted the deal as a way to capture growing demand for industrial technology.
St. Louis, Missouri-based Emerson provides automation solutions to automotive and oil and gas sectors, while AspenTech, headquartered in Bedford, Massachusetts, makes software for companies in mining, chemicals, manufacturing and pharmaceutical industries.
Emerson is contributing software businesses OSI and Geological Simulation Software.
The new company is expected to produce fiscal 2022 revenue of $1.1 billion and adjusted earnings of $90 million while employing 3,700 people, Emerson said.
Lal Karsanbhai, Emerson’s president and chief executive officer, said, “We saw an attractive opportunity to accelerate our software strategy to capitalize on the rapidly evolving industrial software landscape and advance Emerson’s high value portfolio journey.”
“Our customers are increasingly seeking partners to help realize stronger performance as they automate workflows in their facilities to optimize operations. New AspenTech will become an engine for both acquisition and organic growth,” he stated.
Pietri said the merger “enables us to advance our position as a premier, highly diversified industrial software leader poised for significant growth.”
Goldman Sachs and Centerview Partners are serving as financial advisors to Emerson, while JPMorgan is advising AspenTech.
Source: Equities News