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Emerson (EMR) Set to Acquire National Instruments for $8.2B
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Emerson Electric Co. (EMR - Free Report) has entered into a definitive agreement to acquire National Instruments Corp or NI for $60 per share in cash, representing an enterprise value of $8.2 billion. The acquisition will strengthen EMR’s global automation foothold, helping the company expand into high-growth end markets, including semiconductor and electronics, transportation and electric vehicles and aerospace and defense.
Headquartered in Austin, TX, National Instruments produces automated test equipment and virtual instrumentation software. The company generated revenues of $1.66 billion last year.
Apart from expanding automation capabilities, the acquisition will open up industrial software opportunities for EMR, thanks to 20% of NI’s sales generated from software.
Emerson, carrying a Zacks Rank #3 (Hold), expects the transaction to generate cost savings of $165 million by the end of the fifth year upon completion. The buyout is expected to be immediately accretive to EMR’s adjusted earnings. The acquisition will also generate significant recurring revenues and improve EMR’s gross margins.
The board of directors of both companies has approved the transaction. The cash consideration of $60 per share represents a 49% premium to NI's closing share price as of Jan 12, 2023, the day before it announced a strategic review process.
Subject to customary closing conditions, the deal is expected to close in the first half of Emerson's fiscal 2024. EMR expects to fund the transaction using the post-tax proceeds of approximately $8 billion from last year’s majority sale of Climate Technologies to Blackstone.
As a matter of fact, Emerson began pursuing its interest in acquiring NI in May 2022, offering a price of $48 per share. An improved proposal of $53 per share (or $7.6 billion) was offered last November.
National Instruments, carrying a Zacks Rank #3, had resisted meaningful discussions regarding a deal for months, per claims by EMR. In January, the company announced a strategic review process to explore acquisition interests from other companies.
The acquisition deal with NI is aligned with Emerson’s focus on global automation to drive growth and profitability. In an attempt to transform into a global automation company, EMR has lately divested several non-core businesses. In November 2022, the company divested its InSinkErator business, a food waste disposers and instant hot water dispensers manufacturer, for $3 billion. In October 2022, EMR sold a majority stake in its Climate Technologies business to private equity funds managed by Blackstone in a $14 billion deal.
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Ingersoll Rand has an estimated earnings growth rate of 7% for the current year. The stock has rallied 25% in the past six months.
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Emerson (EMR) Set to Acquire National Instruments for $8.2B
Emerson Electric Co. (EMR - Free Report) has entered into a definitive agreement to acquire National Instruments Corp or NI for $60 per share in cash, representing an enterprise value of $8.2 billion. The acquisition will strengthen EMR’s global automation foothold, helping the company expand into high-growth end markets, including semiconductor and electronics, transportation and electric vehicles and aerospace and defense.
Headquartered in Austin, TX, National Instruments produces automated test equipment and virtual instrumentation software. The company generated revenues of $1.66 billion last year.
Apart from expanding automation capabilities, the acquisition will open up industrial software opportunities for EMR, thanks to 20% of NI’s sales generated from software.
Emerson Electric Co. Price
Emerson Electric Co. price | Emerson Electric Co. Quote
Emerson, carrying a Zacks Rank #3 (Hold), expects the transaction to generate cost savings of $165 million by the end of the fifth year upon completion. The buyout is expected to be immediately accretive to EMR’s adjusted earnings. The acquisition will also generate significant recurring revenues and improve EMR’s gross margins.
The board of directors of both companies has approved the transaction. The cash consideration of $60 per share represents a 49% premium to NI's closing share price as of Jan 12, 2023, the day before it announced a strategic review process.
Subject to customary closing conditions, the deal is expected to close in the first half of Emerson's fiscal 2024. EMR expects to fund the transaction using the post-tax proceeds of approximately $8 billion from last year’s majority sale of Climate Technologies to Blackstone.
As a matter of fact, Emerson began pursuing its interest in acquiring NI in May 2022, offering a price of $48 per share. An improved proposal of $53 per share (or $7.6 billion) was offered last November.
National Instruments, carrying a Zacks Rank #3, had resisted meaningful discussions regarding a deal for months, per claims by EMR. In January, the company announced a strategic review process to explore acquisition interests from other companies.
The acquisition deal with NI is aligned with Emerson’s focus on global automation to drive growth and profitability. In an attempt to transform into a global automation company, EMR has lately divested several non-core businesses. In November 2022, the company divested its InSinkErator business, a food waste disposers and instant hot water dispensers manufacturer, for $3 billion. In October 2022, EMR sold a majority stake in its Climate Technologies business to private equity funds managed by Blackstone in a $14 billion deal.
Key Picks
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Deere & Company (DE - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Deere has an estimated earnings growth rate of 31% for the current fiscal year. The stock has gained around 7% in the past six months.
Ingersoll Rand (IR - Free Report) presently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of 7% for the current year. The stock has rallied 25% in the past six months.