Emerson Announces Plans to Merge its Software Units with AspenTech

Manufacturing heavyweight Emerson Electric Co has announced that it will merge its two business software units with Aspen Technology in an $11 billion deal. The cash-and-stock is expected to value AspenTech at around $160 per share. 

The deal is expected to close in the second quarter of 2022. 

This merger will strengthen Emerson’s industrial automation business that caters to a host of industries such as automotive, chemical, and mining. The merger will pave the way for a new industrial software company. Emerson’s grid modernization technology and geo-simulation software coupled with AspenTech’s manufacturing software will be a major part of the new company. 

SEE ALSO: IBM and Atos Partner to Improve Cloud Migration in Financial Services

More about the Merger

Emerson Chief Executive, Lal Karsanbhai said that the company saw a decent window of opportunity to accelerate its software strategy. This merger enables them to strengthen their foothold in the evolving industrial software environment. He also added that their customers are looking for new software partners to automate their workflows and thereby improve their productivity. 

The new company’s software will also support the sustainability requirements of the green energy industry. AspenTech shareholders will get $87 and 0.42 shares of the merged entity for every share they own right now. 

Emerson also revealed that it will own 55% of the new company, while AspenTech shareholders will own the rest. The new business entity is likely to retain AspentTech’s name and will be headed by the present Chief Executive Officer, Antonio Pietri. 

Similar Mergers in the Past

This is not the first time a manufacturing company has tied up with a software company at such as scale. This trend can be observed since 2017 when Schneider Electric took over Aveva by merging their industrial software units. In 2018, Rockwell Automation scooped a $1 billion stake in simulation software company PTC. Such deals have different creative structures and cannot be classified as complete takeovers. 

Bank of America’s Chairman, TMT investment banking said that software firms ask for a higher valuation multiple due to their recurring business models and higher growth rates. This is why it is feasible for industrial firms to put their foot into the market in this manner. 

SEE ALSO: MRI Software Announces Box+Dice Acquisition, Adds Sales CRM to its PropTech Portfolio

Feature Image Source: Image by naor eliyahu from Pixabay 

Karandeep V

Karandeep was born in Pune, Maharashtra, an upcoming metropolitan city in the Western region of India. While most members of his family are engineers, he had different ideas. He was more inclined toward exploring the non-technical aspects of a business, which is why he studied Bachelors of Business Administration at Symbiosis International University, Pune.  Having said that, his love for new and upcoming technologies remained intact, which is why he has written extensively about technology throughout his career. After a brief stint with a gaming company at the beginning of his career, he discovered that his love for writing was not temporary.  Being a tech geek, he always liked installing and playing around with new applications on his mobile devices and the home desktop. He was fascinated by how technology can simplify even the most mundane and complex tasks with just a few commands. He keeps a close eye on how businesses use different tools to streamline their operations to boost productivity and efficiency.  At ToolsMetric, he writes product reviews that cover the main features and specifications of different enterprise applications. The sheer amount of innovation and hard work that goes into building these tech solutions is one of the reasons why Karandeep loves reviewing these tools. Besides product reviews, he also writes interesting news articles and blogs that track the latest developments in the tech industry.  When he is not writing, you can find him rooted to his seat playing video games, watching movies, or supporting his favorite football team. Since his childhood, he has always loved to travel and explore new places. Traveling is a major part of his life due to a myriad of reasons such as experiencing new cultures, food, and traditions. His other hobbies include playing football, cooking, and running.  You can find him on LinkedIn here.

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