Emerson - AspenTech Deal: Everything You Need To Know

  • Emerson Electric Co EMR aims to merge two of its software businesses with Aspen Technology Inc AZPN in an $11 billion deal in a cash-and-stock transaction valuing the new company AspenTech at $160 a share, the Wall Street Journal reports.
  • The purchase price represents a 27% premium to AspenTech's closing share price before the reported merger. The new entity would retain AspenTech's name, and AspenTech CEO Antonio Pietri would lead it.
  • AspenTech's shareholders would receive $87 and 0.42 shares of the combined company for each share, the report said, citing company officials.
  • The businesses are OSI Inc, acquired in 2020 for $1.6 billion, and Geological Simulation Software, accounting for $300 million of the automation segment's $12 billion annual revenue.
  • Emerson would contribute $6 billion in cash as part of the deal and own 55% of the new entity. AspenTech shareholders would own the rest.
  • The clients would utilize the new company's offerings for designing industrial systems to running, repairing, and analyzing.
  • AspenTech manufactures software for companies in industries and recorded $700 million of revenue for FY21.
  • Emerson, a giant industrial conglomerate, manufactures products ranging from Ridgid pipe wrenches to software for power plants commanding a market value of around $58 billion.
  • The companies have had a commercial partnership since 2018.
  • Pietri and Emerson CEO Lal Karsanbhai charted out the deal in July, partly concluding it as better positioned for further acquisitions.
  • Emerson's remaining business would include the rest of its automation division, climate controls, like heating- and air-conditioning equipment, and tools and home products like thermostats and garbage disposals.
  • Price Action: AZPN shares closed higher by 2.84% at $141.55 on Tuesday.
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