Transaction is a significant step in the previously
announced strategic portfolio repositioning; Cash proceeds strengthen balance sheet and
provide increased financial flexibility
ST. LOUIS, August
2, 2016 – Emerson (NYSE: EMR) today announced an agreement to sell Network
Power to Platinum Equity and a group of co-investors. The transaction is valued at $4 billion and Emerson
will retain a subordinated interest in Network Power. The sale of Network Power is expected to
close by December 31, 2016, subject to customary regulatory approvals.
“This agreement
marks a major milestone in the strategic portfolio repositioning we announced
last June,” said David N. Farr, Chairman and Chief Executive Officer of Emerson.
“By selling Network Power to Platinum Equity, we have achieved a successful result
for our shareholders as part of our plan to streamline Emerson to create a more
focused company with significant opportunities for growth and profitability in
our core served markets. We believe
Network Power has a bright future ahead and Platinum Equity is well-positioned
to help the company continue to thrive and realize its full potential.”
With revenue
of approximately $4.4 billion in fiscal 2015, Network Power, based in Columbus,
Ohio is a leading provider of thermal management, A/C and D/C power, transfer
switches, services and information management systems for the data center and
telecommunications industries.
"I'm very proud of the relationship and mutual trust
that the Emerson and Platinum Equity teams have built with one another,"
said Platinum Equity Chairman and CEO Tom Gores. "Emerson is a world class
company that we know shares our commitment to creating value, and this is an
important investment in a business that will be a cornerstone in our portfolio.
It plays to our core strengths. In
addition to our capital resources, we will deploy our global operations skills
to build on the foundation Emerson created and take this business to another
level.”
The proposed
sale marks Emerson’s second divestiture to Platinum Equity in the last three
years. In November 2013 Emerson sold a 51 percent controlling stake in
its embedded computing and power business, which Platinum Equity rebranded
Artesyn Embedded Technologies.
"Emerson
has been a great long-term partner and we are pleased to collaborate again,”
said Platinum Equity Partner Jacob Kotzubei. “We have worked extensively
with Emerson to customize a divestiture solution for Network Power that is
beneficial for all sides and aligns with the long-term strategic goals of the
business. Network Power is recognized as a global leader in infrastructure
technologies and we are confident that working together with management we can
further extend that position as a standalone company.”
Network
Power will continue to be led by Scott Barbour, who has been Executive Vice
President of Emerson and Business Leader for Network Power. Barbour added, “We
firmly believe Platinum Equity is an ideal partner as we continue to drive
efficiency in our operations and invest to bring innovative products and
services to our customers. The work we’ve done at Network Power in recent years
ensures we are well prepared for an ownership transition and have the right
foundation in place to be successful.”
Please see
our Form 8-K filed on August 2, 2016 for additional information regarding this
transaction.
J.P. Morgan Securities LLC
and Centerview Partners LLC served as financial advisors to Emerson
and Davis Polk & Wardwell LLP served as
legal advisor.
About Emerson
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 2015 were $22.3 billion. For more information, visit Emerson.com.
About
Platinum Equity
Founded in 1995 by Tom Gores, Platinum Equity is a global
investment firm with a portfolio of approximately 25 operating companies that
serve customers around the world. Platinum Equity specializes in mergers and operations
– a trademarked strategy it calls M&A&O® - acquiring and operating
companies in a broad range of business markets, including manufacturing,
distribution, transportation and logistics, equipment rental, metals services,
media and entertainment, technology, telecommunications and other industries.
Over the past 20 years, Platinum Equity has completed more than
175 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 the Company’s ability to
successfully complete on the terms and conditions contemplated, and the
financial impact of, its strategic portfolio repositioning actions, 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 Emerson’s most recent Annual Report on Form 10-K and subsequent
reports filed with the SEC.
