Rockwell Automation rejects Emerson's sweetened $29 bn bid
23 November 2017
US-based industrial automation major Rockwell Automation Inc yesterday rejected Emerson Electric Co's third unsolicited takeover bid, saying that the sweetened $29 billion offer still undervalues the company and its prospects for continued growth and value creation.
On 16 November Emerson had offered to pay $218.48 per share, a 16.8 per cent premium to the Rockwell's closing price on 30 October, the last trading day before the public disclosure of its offer.
Rockwell had in August turned down an Emerson bid of $200 per share and again rejected in October Emerson's offer of $215 per share, or $27.6 billion.
Emerson last week raised its offer by 1.6 per cent to $135 per share in cash and $90 per share in Emerson stock for a total of $225 per share or $28.91 billion.
Based on Emerson's Friday closing price, the latest offer is about $218 per share, or a 17 per cent premium to Rockwell's stock price before Emerson first went public with its offer.
Under Emerson's latest offer, Rockwell shareholders would own 40 per cent of the combined company.
In a letter to his counterpart at Emerson, Rockwell CEO Blake Moret said that his company thoroughly considered the offer with advisers and unanimously decided that the proposal was not in the best interests of the company or its shareholders.
"While Emerson may see this proposed acquisition as necessary to enhance its growth and earnings potential and expand its capabilities in the industrial automation and information market, Rockwell Automation does not," the letter read.
''We believe that continuing to execute Rockwell Automation's successful strategy, which is generating extraordinary returns for the Company's shareowners, will create greater long-term value than pursuing your proposal,'' the letter added.
With 22,000 employees and customers in more than 80 countries, Rockwell is the world's largest company in the industrial automation sector. The Milwaukee-based company has a market cap of 24.55 billion and annual revenues of $6.35 billion.
Founded in 1890, Missouri-based Emerson Electric is a Fortune 500 company and manufactures products and provides engineering services for a wide range of industrial, commercial, and consumer markets.
It has around 103,500 employees, 205 manufacturing locations worldwide, market cap of 39.72 billion and annual turnover of around $15.2 billion.
Rockwell share closed yesterday at $191.02, while Emerson's closed at $61.88.