Swiss technology giant ABB Group said it won't match a rival bid from Rutherfurd Acquisitions Limited, a subsidiary of Emerson Electric Co., for U.K.-based Chloride Group plc. The move clears the way for Emerson to substantially increase its presence in the market for unterruptible power supply (UPS) systems and related products and services.
Pittsburgh-based Emerson topped a $1.25 billion bid from ABB with a cash offer worth approximately $1.49 billion (£997 million). An offer of £723 million from Emerson in late April was rejected by Chloride Group's board as significantly undervaluing the company and launched a bidding war that boosted the final deal by almost 38 percent over Emerson's initial offer.
“While we still see considerable value in the combination of ABB and Chloride and have a high regard for the Chloride management team, we must take a disciplined approach when assessing potential acquisitions,” said Joe Hogan, ABB's CEO.
The fit of Chloride Group's UPS operations with one of Emerson's core businesses appears to have made it worth the premium price, according to Emerson.
"The merits of the deal for both companies are compelling," said David Farr, chairman, CEO and president of Emerson, in a release. "The UPS market has become a place where specialist industry knowledge, geographic access and global scale are more important than ever before. The geographic reach and offerings of Emerson and Chloride are highly complementary and highlight the strategic importance of the transaction. In addition, the combination with Chloride is expected to deliver significant annual cost savings of at least £33 million through purchasing and manufacturing efficiencies, staff and facility reductions, and the elimination of other business cost structure duplications including overhead reductions."