Emerson ups its bid for Rockwell to $29 billion

St. Louis corporation makes third offer


St. Louis-based Emerson Electric Co. has upped its bid to acquire Milwaukee-based Rockwell Automation Inc. to $29 billion.

Emerson sent a letter to Rockwell president and chief executive officer Blake Moret proposing an acquisition price of $225 per share, $135 of which would be in cash and $90 in Emerson shares. That’s a 30 percent premium for Rockwell shareholders.

Rockwell Automation
Rockwell Automation’s Milwaukee headquarters.

In the letter, Emerson chairman and chief executive officer David Farr argues the merger would create a leading global automation firm with “unmatched capabilities.” He writes: “We remain convinced there is compelling strategic, operational, and financial merit to bringing together our two companies – and that such a combination would benefit our respective customers, employees and shareholders.”

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He goes on to detail Emerson’s terms and value creation; enhanced profile and strong balance sheet; commitment to engage on social issues; regulatory approvals and financing; and next steps.

The merged company, which Emerson proposes be called Emerson Rockwell and maintain a “significant presence” in Milwaukee, would have about $23 billion in annual revenue and more scale to make investments in software and technology and revenue growth.

The combination would result in synergies savings of more than $6 billion, Farr says, which adds about $10 per share for Rockwell shareholders. When it comes to staff reductions, Emerson indicates it would use a “best of both” philosophy to choose the management team.

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“This would provide the combined company with the greatest opportunity to succeed by enabling us to choose the right people for the right roles from both of our world-class organizations,” Farr says.

Rockwell Automation put out a release this morning confirming it had received the third unsolicited offer and the board is reviewing it.

On Oct. 31, Rockwell confirmed it had rejected two previous takeover bids by Emerson, the highest of which was $27 billion.

And in Emerson’s recent earnings call, Farr indicated the company was not finished with Rockwell.

Rockwell said in its statement this morning: “As it did with Emerson’s prior proposals, consistent with its fiduciary duties and in consultation with its financial and legal advisors, the board of directors of Rockwell Automation will carefully review Emerson’s proposal to determine the course of action that it believes is in the best interest of the company and Rockwell Automation shareowners. The Rockwell Automation Board expects to respond to Emerson’s proposal in due course.”

“We sincerely hope you and your board will objectively evaluate the strategic, financial and operational benefits of this transaction and agree to meet with Emerson to negotiate a mutually beneficial transaction,” Farr says.

Rockwell Automation makes industrial automation equipment. It has about 22,000 employees, and customers in more than 80 countries. It reported a third quarter profit of $216.9 million, up from $191 million in the third quarter of 2016, and its revenue was up 8.5 percent to $1.6 billion.

Emerson, which makes process control systems, electric motors, climate and power technologies and industrial automation, is the parent company of Racine-based InSinkerator, which is planning a new $34 million headquarters and lab facility in Mount Pleasant.

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