Global automation and engineering giant Emerson (NYSE: EMR) has agreed to complete its takeover of industrial software solutions provider AspenTech (NASDAQ: AZPN), by buying the shares it doesn’t already own in the company in a deal valued at $7.2 billion.
Under the terms of the agreement, confirmed by both companies on Monday, Emerson – which already holds a majority 57% stake in AspenTech – has offered to buy the remaining stake at $265 per share in an all-cash tender offer.
The offer represents a 10.4% hike on Emerson’s previous offer of $240 per share for the company, and gives AspenTech an implied market valuation of $16.8 billion. The seeds of the takeover were planted in 2022, after Emerson initially completed a majority investment stake in AspenTech with an initial stock holding of 55%.
The deal is expected to close in the first half of this year. Once the transaction closes, AspenTech’s common stock will cease to trade on the NASDAQ, and it would subsequently operate as a wholly owned subsidiary of Emerson.
The deal, and its progression pattern, mirrors industry rival Schneider Electric’s (EPA: SU) gradual takeover of AVEVA in 2023, as the battle for the multi-billion dollar global industrial automation market heats up in the age of artificial intelligence, industrial internet of things, quantum computing and big data analytics.
Honeywell (NASDAQ: HON) – the largest company in the sphere by market capitalization – already has huge industrial software units. European majors Siemens (ETR: SIE) and ABB (SWX: ABBN) are also expanding their industrial software solutions portfolio to cater to the approaching digital horizon, as is Japan’s Yokogawa (TYO: 6841) in a fiercely competitive landscape.
“This transaction marks a key milestone in our portfolio transformation, and we are excited to fully integrate AspenTech into Emerson to advance our vision for software-defined control,” said Emerson president and chief executive officer Lal Karsanbhai.
“We look forward to offering AspenTech shareholders the opportunity to tender their shares at compelling and certain value while welcoming the AspenTech team into Emerson.”
AspenTech chief executive officer Antonio Pietri said: “Emerson has been an outstanding partner to AspenTech, and in this next chapter, we look forward to further differentiating our offering as we innovate to serve customers’ evolving industrial software needs.
“This agreement is a testament to the dedication of AspenTech’s employees, who have executed on our partnership and transformed the business to position it for future success.”
Emerson will look to finance the deal with its existing cash pile and debt financing. Goldman Sachs and Centerview Partners are acting as financial advisors to Emerson, while Qatalyst Partners and Citi are serving as independent financial advisors to AspenTech.
The transaction was unanimously recommended for approval by a special committee of the AspenTech’s board of directors composed of three independent and disinterested directors, which, as announced by AspenTech on November 20, 2024, was formed to consider the non-binding proposal made by Emerson in November.
Following the recommendation of the special committee, the AspenTech board of directors approved the transaction. The transaction has also been unanimously approved by Emerson’s board of directors.
“We are pleased to reach this compelling all-cash agreement with Emerson, which is the culmination of the special committee’s thorough review of Emerson’s proposal,” said the chair of AspenTech’s special committee Robert Whelan, Jr. “We are confident this transaction is the best path forward for AspenTech and its shareholders.”