Equipment Maker Rockwell Automation Rejects New Offer From Emerson

Rockwell Automation Inc. has rejected a takeover bid by Emerson Electric Co. worth roughly $27.5 billion, spurning a deal that would combine two big U.S. makers of machines and software used in manufacturing.

The latest half-cash, half-stock bid by Emerson, a St. Louis-based industrial conglomerate, came in early October and was valued at $215 a share, according to Rockwell. The Milwaukee-based maker of industrial equipment said it also rejected an Emerson bid in August valued at $200 a share.

Rockwell Chief Executive Blake Moret said in a statement the company’s board and management are “confident in the company’s strategic direction and our ability to continue delivering superior levels of growth and value creation.”

An Emerson spokesman confirmed the company’s attempt to acquire Rockwell but declined to comment further.

Rockwell shares rose 7.4% to $200.82 on Tuesday. Emerson’s stock fell 4.3%. It wasn’t immediately clear what might be Emerson’s next step. Now that the bids have become public, Rockwell may feel shareholder pressure to engage in negotiations.

Rockwell was skeptical of the large amount of Emerson’s stock, according to people familiar with the matter. It also has concerns about Emerson’s management and its record with mergers and acquisitions, the people said.

One of the people described Rockwell’s view of Emerson’s bid as: “They need us. We really don’t really need them.” Emerson’s automation business is largely focused on chemicals, cement, oil and natural-gas installations and other materials produced in outdoor facilities. Its business portfolio also includes hardware such as industrial valves and kitchen garbage disposals.

Rockwell has generally specialized in developing equipment and software used to make products such as cars, electronics and food. Rockwell has increasingly been focused on what it calls the “connected enterprise,” using software to link manufacturing to data across a company’s operations.

 

Elusive Quarry
Rockwell Automation's shares are up on news of Emerson's interest. Percentage change in share price since May 1, 2017


Source: FactSet

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