Emerson merges software business with AspenTech in $ 11 billion deal

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Emerson Electric Co. has announced that it will merge its software business with rival Aspen Technology (AspenTech) in an $ 11 billion deal that will bring together the two companies’ expertise in industrial software applications. This is Emerson’s latest initiative to support the rapid growth of digitization in the power generation industry.

“We saw an exciting opportunity to accelerate our software strategy to capitalize on the rapidly evolving industrial software landscape and advance the journey of Emerson’s high-value portfolio,” said Emerson CEO Lal Karsanbhai , in a statement on October 11. AspenTech shareholders will receive $ 87 per share in cash and 0.42 share in the new company, the companies said on Monday. Emerson will bring $ 6 billion in cash to the new company, taking a 55% stake.

“Our customers are increasingly looking for partners to help them achieve higher performance by automating workflows in their facilities to optimize operations,” said Karsanbhai. “The new AspenTech will become a driver of both acquisition and organic growth.”

Emerson, a technology and engineering company based in Ferguson, Missouri, continues its efforts to become an industrial software provider. The company in the electricity sector is working on projects to optimize power plant production and support the modernization of the American electricity grid. Emerson agreed last year to pay $ 1.6 billion to Open Systems International (OSI), an operating technology software provider serving the global energy industry. The deal announced today will incorporate OSI technology, designed to support digital operations to more seamlessly integrate renewable energy resources into the power grid and improve energy efficiency and reliability.

The new company will keep the AspenTech name

AspenTech, based in Bedford, Mass., Manufactures software for companies in industries such as energy, chemicals, manufacturing, metals, and mining. The company reportedly considered selling all or part of itself. The new company will retain the AspenTech name, as well as its Massachusetts headquarters, and will be led by current AspenTech CEO Antonio Pietri.

“Today’s announcement marks an exciting new era,” Pietri said on Monday. “This transaction allows us to strengthen our position as a leader in highly diversified industrial software, poised for significant growth, strong financial performance and a vehicle to drive future software acquisitions, while delivering immediate monetary value to AspenTech shareholders. . The new AspenTech will benefit from a larger and more diverse market, which we can serve with a comprehensive software portfolio, an expanded global sales channel and an even stronger balance sheet strengthened by Emerson. In addition, this transaction expands our ability to support our clients’ global sustainability ambitions.

Emerson and AspenTech said Monday they expected the new company to achieve efficiencies of around $ 16 per share, or nearly $ 1.1 billion, through cost savings and leveraging Emerson’s $ 120 billion installed equipment base and 12,000-strong sales force.

Emerson reported revenue of $ 16.8 billion for fiscal 2020. AspenTech achieved revenue of $ 790.4 million in fiscal 2021, up 18.4 % over the previous year, and employs around 1,900 people. The new business is expected to employ around 3,700 workers.

Support for T&D initiatives

The companies in a press release said the new AspenTech “will deliver differentiated offerings in industrial AI and asset optimization with Emerson’s network modernization technology, advanced distribution management systems and simulation software. geological. Thanks to Emerson’s strong capabilities, the new AspenTech will have an end-to-end software offering and will be even better positioned to help customers improve their safety, reliability and production while reducing emissions.

The companies also noted that the addition of OSI capabilities “will allow the new AspenTech to expand its transmission and distribution offering to support power grid modernization and ensure grid reliability.” This expanded software capability will leverage Emerson’s global life science expertise, which includes 3,000 installed control systems, 30 sites, and nearly 1,000 dedicated project engineering and consulting employees. to active life science projects.

The companies noted that AspenTech’s new software “is also scalable and adaptable to emerging green energy markets and will be well positioned to meet the sustainability needs of blue chip customers in current and emerging energy transition markets.” such as biofuels, hydrogen and carbon capture. . “

Darrell proctor is Senior Associate Editor for POWER (@POWERmagazine).



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