I’ve written about the market I’ve covered for the past 25 years becoming mature. Symptoms of a mature market include portfolio restructuring to concentrate on a particular segment. We’ve seen this with several of the prominent automation companies. Emerson has also been shedding businesses. They have just announced three more strategic moves.
- Emerson has made a proposal to acquire all outstanding shares of common stock of AspenTech (“AspenTech”) not already owned by Emerson for $240 per share in cash. The proposed transaction follows Emerson’s 55% majority investment in AspenTech, which was completed in 2022. Emerson currently owns approximately 57% of AspenTech’s outstanding shares of common stock. Upon completion of the transaction, AspenTech would become a wholly owned subsidiary of Emerson.
- Emerson has commenced a process to explore strategic alternatives, including a cash sale, for the Safety & Productivity segment, which comprises the remaining businesses not related to automation in Emerson’s portfolio.
- Emerson plans to repurchase approximately $2.0 billion of its common stock in fiscal year 2025, with approximately $1.0 billion of the repurchase expected to be completed in the first quarter of fiscal year 2025.
Emerson believes bringing AspenTech fully into the company accelerates realization of software-defined control. Developments over the last 3 years have proven the value and feasibility of software-defined control.
Companies taking this sort of action always believe in “synergies.” As a single company leveraging the proven Emerson Management System, there will be opportunities for immediate additional cost efficiencies from the transaction. Commercially, the proposed transaction drives greater alignment, collaboration and integration, to allow Emerson and AspenTech to invest, innovate and cross-sell more effectively and drive further sales synergies over time.
Exploring Strategic Alternatives for Safety & Productivity Segment
Emerson also announced today that it is exploring strategic alternatives for its Safety & Productivity segment, including a cash sale, to maximize shareholder value. The segment, which includes Emerson’s legacy tools businesses, contributed $1.4 billion of sales to Emerson in fiscal year 2024, with 24.5% Adjusted Segment EBITA2 margins.
Increasing Return of Capital to Shareholders
Emerson also announced today that it plans to repurchase approximately $2.0 billion of its common stock in fiscal year 2025 increasing its total capital returned to shareholders to approximately 100 percent of the guided free cash flow. Emerson expects to complete approximately $1.0 billion of the repurchase by the end of the first fiscal quarter.
