Emerson raises bid for Rockwell Automation to $225 per share in cash and stock
Emerson (EMR) announced that its Chairman and CEO, David Farr, has sent a letter to Rockwell Automation (ROK) President and CEO, Blake Moret, proposing to acquire all outstanding shares of Rockwell for $225 per share, consisting of $135 per share in cash and $90 per share in Emerson shares.
The total enterprise value of the transaction is approximately $29B.
Farr’s letter states in part: “Over the past several months, we have attempted to engage with you privately regarding a business combination of Emerson Electric and Rockwell Automation. We remain convinced there is compelling strategic, operational, and financial merit to bringing together our two companies – and that such a combination would benefit our respective customers, employees and shareholders…Given our continued conviction in the significant value creation opportunity this combination represents, I am sending you an enhanced proposal for Emerson to acquire Rockwell in a transaction that would provide Rockwell shareholders with immediate and long-term value that we believe is well in excess of what Rockwell could achieve on a standalone basis…The portion of the consideration to be paid in Emerson stock would result in Rockwell shareholders owning approximately 22% of the combined company, allowing them to participate in the significant value creation from synergies generated by a combination.
Based on public information only, we estimate the total capitalized value of synergies to be in excess of $6 billion, which equates to over $1.3 billion or $10 per share of additional value to Rockwell shareholders through their continuing ownership.
Including the value of synergies, Rockwell shareholders would receive $235 per share in total value, representing aggregate value creation of 36% compared to Rockwell’s undisturbed 90-day volume weighted average share price as of October 30…We and our advisors have conducted extensive analysis of the regulatory approvals that would be required in connection with the proposed transaction, and we are confident that the transaction would receive all necessary approvals in a timely manner. We do not anticipate any material antitrust or other regulatory issues that would extend the normal timetable for closing a transaction of this nature.
We strongly believe the combined company would be able to do more for our customers than either of us could do separately…Our proposal is not subject to any financing contingency. We have had in-depth discussions with J.P. Morgan, which is highly confident Emerson can finance the cash portion of the transaction with a combination of cash on our balance sheet and newly issued debt. We sincerely hope you and your Board will objectively evaluate the strategic, financial and operational benefits of this transaction and agree to meet with Emerson to negotiate a mutually beneficial transaction.”
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