I consider the Emerson Chief Marketing Officer the best branding expert in our market. She must have lost a battle this time. Emerson and AspenTech announced the successful closing of the combination of Emerson’s industrial software businesses – OSI Inc. and its Geological Simulation Software business – with AspenTech “to create a global industrial software leader.” The new entity is called—new AspenTech. Evidently they are using the lower case “new” on the name.
With the close of the transaction, Emerson owns 55% of new AspenTech on a fully diluted basis and AspenTech shareholders own the remaining 45%. Shares of new AspenTech will begin trading on NASDAQ under the ticker symbol “AZPN” (previously AspenTech’s ticker symbol) starting May 17, 2022.
This reflects the new wave of bringing software businesses into mainline hardware businesses. Don’t do a complete acquisition. Restructure the investment so that the company owns a majority of shares and the “acquired” company becomes the minority holder. I’m not a financial genius, but from an organizational point-of-view it makes sense. The finances of a hardware business are much different from those of a software business. This keeps the messy part separated.
This deal also makes sense in that AspenTech has been one of those tech companies with good technology but has struggled financially. I’m sure Emerson brings strong financial controls along with its investment that should help stabilize the company. This should be good for customers.
“I am excited to announce the close of our transaction with AspenTech, which accelerates Emerson’s software strategy and creates an enhanced, high-performance, leading industrial software company with immediate scale and relevancy in a fast-paced, evolving market. Today marks a significant milestone for Emerson and is a testament to our commitment to continue building a higher growth, more diversified portfolio. Together with new AspenTech, we expect to realize significant revenue and cost synergies, while having the platform and flexibility to strategically deploy capital for growth through continued investment and M&A,” says Lal Karsanbhai, President and Chief Executive Officer of Emerson.
“We have now begun a new era at AspenTech, expanding our global leadership in industrial software by providing capabilities that support the entire lifecycle of complex operations across a wide range of industry verticals,” said Antonio Pietri, President and Chief Executive Officer of new AspenTech. “With a comprehensive software portfolio, an expanded global sales channel and an even stronger balance sheet reinforced by Emerson, new AspenTech will be uniquely positioned to help our customers address the dual challenge of meeting the increasing global demand for resources in a sustainable manner. As we move forward, I am confident that new AspenTech is poised for significant growth and continued success as we deliver value for our customers, employees and shareholders.”
Goldman Sachs & Co. LLC and Centerview Partners LLC served as financial advisors to Emerson, and Davis Polk & Wardwell LLP served as legal counsel. J.P. Morgan Securities LLC served as financial advisor to AspenTech, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel.