Emerson Electric Makes A $7 Billion Hostile Offer For National Instruments

Emerson Electric Co, a US engineering and industrial software company, announced a nearly $7 billion offer for National Instruments Corp, which it has been attempting to acquire unsuccessfully for several months.

The software company’s all-cash bid of $53 per share, first submitted to NI on Nov. 3, represents a 13% premium to NI’s Friday close. In early morning trade on Tuesday, NI shares reached a record high of $54.69, while Emerson fell 5%.

Reuters was first to report on Jan. 13 Emerson’s acquisition interest in NI, after the latter announced a strategic review and adopted a so-called “poison pill”.

Emerson stated that it first approached NI in May of last year with a $48 per share offer and that it is ready to nominate directors to NI’s board before the Jan. 27 deadline.

“After refusing to work with us toward a premium cash transaction over the past eight months, we are making our interest public for the benefit of all NI shareholders,” said Lal Karsanbhai, CEO of Emerson.

Following another round of back-and-forth between the two companies, NI informed Emerson in November that it had formed a “working group of its board” to examine the improved offer and explore options with the assistance of its advisers.

“NI has continued to resist meaningful engagement with Emerson to work toward an agreement for more than two months,” Emerson said in a statement. Emerson has already purchased 2.3 million NI shares and has obtained regulatory approval to increase its stake, according to the company.

NI said in a separate statement that it chose to conduct a “comprehensive review” that would include interest from other potential buyers “rather than negotiate exclusively with Emerson, which NI believes would be detrimental to shareholder interests.”

Emerson has made a number of acquisitions in recent years to position itself as a provider of automation products and services, and the offer to buy NI is a new multibillion-dollar bet in that direction.

In October, Emerson sold a majority stake in its climate technologies unit to Blackstone Inc in a $14 billion deal.

Emerson stated at the time that the proceeds would be used for “strategic M&A to strengthen and diversify its automation portfolio in four targeted adjacent markets.”

Last year, Emerson also sold its waste disposal and hot water dispenser division to Whirlpool Corp and merged its software units with smaller rival Aspen Technology.

NI, formerly known as National Instruments, is a company that specializes in the development of automated testing and measurement tools to aid in the research and validation of new technologies. It provides services to the semiconductor, transportation, aerospace, and defense industries.

The offer has an enterprise value of $7.6 billion. Emerson stated that the offer was not contingent on financing.

Citi Research wrote in a note on Sunday that NI could be a good strategic fit for Emerson because it has indicated a focus on test and measurement markets.

Emerson’s financial advisers are Goldman Sachs and Centerview Partners LLC, and its legal advisers are Davis Polk & Wardwell LLP and Sidley Austin LLP. BofA Securities and Wachtell, Lipton, Rosen & Katz are advising NI.

(Adapted from USNews.com)

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