Emerson Electric Co. Courts Rockwell Automaton Inc. with a Bigger Acquisition Offer

The multinational company, Emerson Electric Co., announced on Thursday that it upped its offer to acquire Rockwell Automation Inc. for $29 billion. Rockwell Automation Inc. declined their previous offer of $27.6 billion, stating that it undervalued the company.

CEO of Emerson Electric Co., David N. Farr, offered via letter to acquire all of Rockwell’s outstanding shares for $225 per share. The Emerson – Rockwell acquisition offer consists of $135 per share in cash and $90 percent in Emerson Electric Co. shares.

Rockwell Automation was first approached by Emerson Co. in October, the first bid being of $215 per share.

Coupled with the proposal, Emerson Co. also posted slides in which they detailed the financial rationale behind the transaction. Both of these were addressed to Rockwell Automation’s CEO, Blake D. Moret. The slides were posted on the company’s Investor Relations page.

The smaller rival’s shares were up 7 percent, at $202, in premarket trading yet they still weren’t able to match the offer price. Emerson Electric’s shares were down 2 percent, at $58.50 dollars.

Emerson Electric Co. estimates $6 billion of savings if a deal is made which would mean $10 per share for Rockwell shareholders. Farr is convinced that the merger holds great strategic, operational, and financial merit. Together, the two companies would have an increased scale across a wider market. The annual revenue is estimated to be around $23 billion.

„The industrial logic for this combination is clear. A combination of Emerson Electric and Rockwell Automation would create a leader in the $200 billion global automation market.” Farr said in his statement.

The company is most efficient in process automation, offering its services to plants and factories in mining and cement sectors.

Rockwell focuses on discrete automation, helping assemble component parts to manufacture items ranging from automobiles to computer systems.

Rockwell Automation has Goldman, Sachs & Co. acting as its financial advisor. As of now, Rockwell has not responded to the offer.

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