Emerson is ‘diversifying … into test and measurement automation’
National Instruments, which said in January that it was exploring its options for a sale, is set to be acquired by industrial conglomerate Emerson for $2 billion, or $60 per share.
Emerson already owns 2% of NI’s outstanding stock, or 2.3 million shares, which it said will bring down its actual cost to about $59.61 per share. The company had been aggressively pursuing NI, according to Reuters, including a hostile takeover attempt that was dropped when NI began sale negotiations; other suiters for NI included test conglomerate Fortive as well as Keysight Technologies.
NI said in January that it had been approached by potential buyers and that its board of directors had begun a review of its strategic options. The test equipment company headquartered in Austin, Texas also put into place a “shareholder rights” plan aimed at avoiding a hostile takeover while it considered its options.
The acquisition is expected to close in the first half of Emerson’s fiscal 2024, or by March 2024. Emerson will finance the purchase in part through proceeds raised from the sale of its commercial HVAC and refrigeration segment to private equity group Blackstone, which the company said is expected to close in the second calendar quarter of 2023.
Emerson estimated that the NI transaction will result in $165 million in cost synergies over five years. “In markets like semiconductor and electric vehicle manufacturing, NI expands Emerson’s reach into the design and validation phase of the lifecycle, providing early access to customers,” the company said, adding that the two companies “share innovation-focused engineering cultures. With Emerson’s proven track record of innovation and successful new product launches, the combined company will be able to accelerate and expand the development of innovative offerings for customers leveraging the complementary expertise of both organizations.”
“We are pleased to reach an agreement with NI, whose best-in-class test and measurement product and software offerings accelerate Emerson’s progress toward a cohesive, higher growth and higher margin automation portfolio,” said Lal Karsanbhai, president and CEO of Emerson. “With this expansion into test and measurement, Emerson will enhance its automation capabilities and gain a broader set of customers that relies on NI’s solutions at critical points along the product development cycle. These capabilities provide Emerson industry diversification into attractive and growing discrete markets like semiconductor and electronics, transportation and electric vehicles, and aerospace and defense that are poised to benefit from secular growth trends. NI’s business is well-aligned with our vision for automation and we look forward to working together to bring more comprehensive and innovative solutions to our customers, accelerate growth and position Emerson to deliver significant shareholder value.”
“Over the past several months, we’ve been evaluating strategic options for the future of our business with the intent to maximize its value,” said Eric Starkloff, NI’s Chief Executive Officer. “We ran a robust and comprehensive process, considered a range of potential options, and believe this represents the best outcome for all NI stakeholders. This transaction is a strong testament to the improvements and initiatives we’ve implemented in recent years that have transformed NI into a software focused company with higher growth, better profitability and lower cyclicality. We’re thrilled that Emerson recognizes the value we’ve created and we believe they will help us build on our momentum to further position NI as a leading provider of software-connected automated test and measurement systems.”
