ST. LOUIS--August 06, 2013--Emerson (NYSE: EMR) today
announced an agreement to sell a 51 percent stake in its embedded computing and
power business to Platinum Equity. Emerson will receive approximately $300
million in cash and will retain a 49 percent noncontrolling interest in the
business, which will operate as an independent company. Share repurchase will
be increased by $600 million to offset associated earnings dilution.
"After extensive consideration, we have found an
arrangement to exit this business in a manner that maximizes its value for our
shareholders, " said Emerson Chairman and Chief Executive Officer David N.
Farr. "The embedded computing and power business is a technology leader in
the industry it serves, but no longer fits strategically in our portfolio. The
transaction with Platinum will allow us to immediately focus on our core
businesses while also participating in the upside from repositioning the
business as it focuses on growth as an independent company."
With revenue of approximately $1.4 billion in 2012,
Emerson's embedded computing and power business, based in Carlsbad, Calif., is
a market leader in the design and supply of technologies used in communications
and computing equipment and other applications.
"We have forged a strong partnership with Emerson,
coming together in a way that will create success for everyone," said
Platinum Equity Chairman and Chief Executive Officer Tom Gores. "We will
build on the foundation established under Emerson to further position the
business as a strong and innovative competitor in the marketplace."
The transaction is expected to close in approximately
three to six months, upon securing regulatory approvals in various countries.
Once the transaction is completed, Emerson's interest in the new entity will be
reported using the equity method of accounting. Sales and earnings from the embedded
computing and power business will continue to be reported in Emerson's 2013
results, which will include a noncash pretax goodwill impairment of $503
million related to the business.
"Platinum Equity worked closely with Emerson to
craft a transaction solution customized to meet both Emerson's needs and the
needs of the business," said Jacob Kotzubei, the partner at Platinum
Equity who led the team pursuing this transaction. "We are excited to work
with Emerson and the EC&P management team to help grow the business and
reinforce its position as a premier provider of highly engineered customized
power and embedded computing products."
Today at 2 p.m. ET, Emerson management will discuss third
quarter 2013 results and further details of this transaction during a
conference call. Interested parties may listen to the live conference call via
the Internet by visiting Emerson's website at www.Emerson.com/financial and
completing a brief registration form. A replay of the conference call will
remain available for approximately three months.
Emerson (NYSE: EMR), based in St. Louis, Missouri (USA),
is a global leader in bringing technology and engineering together to provide
innovative solutions for customers in industrial, commercial, and consumer
markets around the world. The company is comprised of five business segments:
Process Management, Industrial Automation, Network Power, Climate Technologies,
and Commercial & Residential Solutions. Sales in fiscal 2012 were $24.4
billion. For more information, visit www.Emerson.com.
About Platinum Equity
Platinum Equity (www.platinumequity.com)
is a global M&A&O(R) firm specializing in the merger, acquisition and
operation of companies that provide services and solutions to customers in a
broad range of business markets, including information technology,
telecommunications, logistics, metals services, manufacturing and distribution.
Since its founding in 1995 by Tom Gores, Platinum Equity has completed more
than 150 acquisitions.
Forward-Looking and Cautionary Statements
Statements in this press release that are not strictly
historical may be "forward-looking" statements, which involve risks
and uncertainties, and Emerson undertakes no obligation to update any such
statements to reflect later developments. These risks and uncertainties include
our ability to complete the embedded computing and power transaction, as well
as economic and currency conditions, market demand, pricing, protection of
intellectual property, and competitive and technological factors, among others,
as set forth in the Company's most recent Annual Report on Form 10-K and
subsequent reports filed with the SEC.