EMR Stock Down 2.55%, Emerson Acquires 55% Stake of AspenTech

UTC by Steve Muchoki · 3 min read
EMR Stock Down 2.55%, Emerson Acquires 55% Stake of AspenTech
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Following the merger between Emerson and AspenTech, the new AspenTech is expected to report annual revenue of $1.1 billion in the 2022 financial year.

Emerson Electric Co. (NYSE: EMR) stock closed yesterday trading at $94.18, down 2.55%. The global technology and engineering company announced yesterday that it had acquired a 55% stake in AspenTech (NASDAQ: AZPN). Notably, AspenTech shareholders will receive approximately $87 per share in cash. Additionally, they will receive 0.42 shares of new AspenTech for each AspenTech share.

The merger between Emerson and AspenTech will oversee the development of the former’s industrial software business and the Geological Simulation Software business. In addition, the New AspenTech will offer a highly differentiated industrial software portfolio.

Management on Emerson and AspenTech Merger

“We saw an attractive opportunity to accelerate our software strategy to capitalize on the rapidly evolving industrial software landscape and advance Emerson’s high-value portfolio journey,” said Lal Karsanbhai, President and Chief Executive Officer of Emerson. “Our customers are increasingly seeking partners to help realize stronger performance as they automate workflows in their facilities to optimize operations. New AspenTech will become an engine for both acquisition and organic growth.”

“Today’s announcement marks an exciting new era. This transaction enables us to advance our position as a premier, highly diversified industrial software leader poised for significant growth, strong financial performance and a vehicle to drive future software acquisitions while providing immediate cash value to AspenTech shareholders,” said Antonio Pietri, President and Chief Executive Officer of AspenTech, who will lead new AspenTech. “The new AspenTech will benefit from a larger and more diversified market, which we will be able to serve with a comprehensive software portfolio, an expanded global sales channel, and an even stronger balance sheet reinforced by Emerson. Additionally, this transaction expands our ability to support customers’ global sustainability ambitions.”

Side Notes

Following the merger between Emerson and AspenTech, the new AspenTech is expected to report annual revenues of $1.1 billion in the financial year 2022. Additionally, the new AspenTech is expected to report an adjusted EBITDA of approximately $490 million besides a double-digit annual spend growth through 2026.

Notably, Emerson noted that the new AspenTech will have a predictable business model with 86% pro forma revenues from software.

According to market analytics provided by MarketWatch, Emerson has a market capitalization of approximately $57.77 billion. Notably, EMR shares have gained approximately 35.35%, and 17.18% in the past year and YTD respectively through Monday. However, the company’s stock market has dropped approximately 4.49% and 5.02% in the past three months and one month respectively through Monday. Having been rated 24 times, EMR stock received an average rating of Over rating.

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Steve Muchoki
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