US regulator gives conditional nod for $3.15 bn Emerson Electric-Pentair deal

The US regulator yesterday approved Emerson Electric Co's proposed acquisition of Switzerland-based valves and controls business of British industrial valve manufacturer Pentair Plc, subject to conditions.

The US Federal Trade Commission (FTC) approved the deal subject to Emerson Electric selling Pentair's switchbox business to Stamford, Connecticut-based Crane Co.

Emerson and Pentair are manufacturers of industrial valves and control products, including switchboxes, which are widely used in the oil and gas, chemical, petrochemical, power, and other industries. Switchboxes are devices used to monitor and control valves that regulate the flow of liquids and gases in industrial facilities.

According to the FTC, the proposed acquisition would combine the two leading manufacturers of switchboxes in the US, which together control about 60 per cent of the US market.

''These market share numbers may underestimate the likelihood of anticompetitive effects to switchbox customers that would otherwise result from this transaction,'' the FTC said in a statement.

Switchboxes perform a critical safety function, so brand reputation and product reliability are very important to customers. Emerson's TopWorx and Pentair's Westlock switchboxes are the most widely-used brands nationwide and, for many customers, the only acceptable brands of switchboxes.

Under the terms of the consent agreement, 10 days post closing of the deal, Emerson Electric must divest Westlock Controls Corp, the Pentair subsidiary that designs, manufactures, and sells switchboxes, to Crane Co.

The order requires Emerson to provide Crane all of Westlock's production facilities, intellectual property, confidential business information, and the option to hire Westlock employees.

In August 2016, Emerson Electric agreed to buy the valves and controls business of Pentair for $3.15 billion in cash (See: Emerson Electric to buy valves and controls business of Pentair Plc for $3.15 bn)

Based in in Schaffhausen, Switzerland, Pentair Valves & Controls is a global leader in providing valve solutions for customers through its product brands like Anderson-Greenwood, Crosby, Vanessa, Keystone and Biffi.

It has a large global installed base in chemical, petrochemical, oil and gas, power, mining and other process industries.

The unit generates annual revenue of $1.84 billion and employs nearly 7,500 people globally.