Latest from Industry

Illustration 60886103 © Kheng Ho To / Dreamstime.com
Photo 226496518 / Mohd Izzuan Ros / DreamsTime
Photo 226496518 / Mohd Izzuan Ros / DreamsTime
Illustration 60886103 / Kheng Ho To / Dreamstime
Illustration_60886103 / Kheng To To / Dreamstime
Image

Emerson Raises $5.2 Billion by Selling Network Power and Motors and Drives Units

Aug. 2, 2016
Emerson agreed to sell its Network Power business line to private equity investor Platinum Equity and a group of co-investors and agreed to sell its Leroy-Somer and Control Techniques business units to Nidec Corp.
Emerson, St. Louis, is moving quickly to divest business lines that don’t meet its performance thresholds amid a refocusing of the company. Emerson announced two deals that together will give it $5.2 billion to support that refocusing. Emerson agreed to sell its Network Power business line to private equity investor Platinum Equity and a group of co-investors. That transaction is valued at $4 billion and Emerson will retain a subordinated interest in Network Power. Emerson also agreed to sell its Leroy-Somer and Control Techniques business units to Nidec Corp., Kyoto, Japan, for $1.2 billion. Both deals are expected to close by December 31, 2016, subject to customary regulatory approvals.

Platinum may be familiar to readers because the same firm led a group that bought a 51 percent controlling stake in Emerson’s embedded computing and power business, which Platinum Equity rebranded Artesyn Embedded Technologies.

Network Power will continue to be led by Scott Barbour, who has been executive vice president of Emerson and business leader for Network Power. Barbour added, “We firmly believe Platinum Equity is an ideal partner as we continue to drive efficiency in our operations and invest to bring innovative products and services to our customers. The work we’ve done at Network Power in recent years ensures we are well prepared for an ownership transition and have the right foundation in place to be successful.”

Leroy-Somer, headquartered in France, was acquired by Emerson in 1990. Control Techniques has been an Emerson business since 1995, and is based in the United Kingdom. The businesses manufacture alternators, drives, and motors, with approximately 9,500 employees around the world. The two businesses had combined FY 2015 revenue of approximately $1.7 billion.

“Upon completing the transaction, Emerson will be better positioned to accelerate growth and value creation over time, while Nidec will have a unique opportunity to strengthen its global motor presence and expand into drives and power generation,” said David Farr, Emerson chairman and CEO. “I am grateful to the employees of Leroy-Somer and Control Techniques for the strong and valuable performance they have provided for decades.”

With revenue of approximately $4.4 billion in fiscal 2015, Network Power, based in Columbus, Ohio is a provider of thermal management, A/C and D/C power, transfer switches, services and information management systems for the data center and telecommunications industries.

“This agreement marks a major milestone in the strategic portfolio repositioning we announced last June,” said David Farr, Emerson chairman and CEO. “By selling Network Power to Platinum Equity, we have achieved a successful result for our shareholders as part of our plan to streamline Emerson to create a more focused company with significant opportunities for growth and profitability in our core served markets. We believe Network Power has a bright future ahead and Platinum Equity is well-positioned to help the company continue to thrive and realize its full potential.”

The acquisition will become a cornerstone of the Platinum Equity portfolio. “It plays to our core strengths.” said Tom Gores, the firm’s chairman and CEO. “In addition to our capital resources, we will deploy our global operations skills to build on the foundation Emerson created and take this business to another level.”