Emerson Announces Sale of Remaining Interests in Copeland to Blackstone
Emerson (NYSE: EMR) announced the sale of its remaining 40% interest in the Copeland joint venture to Blackstone for approximately $3.5 billion. The transaction includes $3.4 billion in pre-tax cash proceeds, net of $0.1 billion in future indemnity obligations. This move aims to simplify Emerson's portfolio and boost its focus on automation markets. The deal, unanimously approved by Emerson's Board of Directors, is expected to close in the second half of 2024, subject to regulatory approvals. Emerson plans to use the $2.9 billion after-tax proceeds to pay down debt. The transaction will result in a net pre-tax gain of about $0.2 billion.
- Sale of remaining 40% interest in Copeland for $3.5 billion.
- Expected net pre-tax gain of approximately $0.2 billion.
- Pre-tax cash proceeds amounting to $3.4 billion.
- Transaction aims to simplify Emerson's portfolio.
- Enhanced focus on high growth automation markets.
- Board of Directors unanimously approved the transaction.
- Planned use of $2.9 billion after-tax proceeds to pay down debt.
- Transaction subject to regulatory approvals which can delay the process.
- Future indemnity obligations of $0.1 billion.
- Full exit from Copeland may reduce diversification in revenue streams.
Insights
Emerson's sale of its remaining interests in Copeland represents a significant move in its portfolio transformation strategy. The transaction is valued at
From a financial perspective, this transaction is expected to generate a net pretax gain of approximately
Such actions can be positive for investors in the short term, leading to potential stock price appreciation due to improved financial health. However, investors should consider the long-term implications of exiting a business that may continue to grow under Blackstone's management. Copeland's focus on energy-efficient solutions aligns with global sustainability trends, which could mean potential future gains are being ceded.
From a market standpoint, Emerson's divestiture from Copeland signals a strategic pivot towards automation—a sector with promising growth prospects. The global automation market is projected to grow significantly, driven by technologies like IoT, AI and robotics. Emerson's increased focus on automation can position it well to capitalize on these trends, potentially leading to enhanced market share and revenue growth.
However, the timing of the sale is crucial. With the move towards more energy-efficient heating and cooling solutions, Copeland's market could see accelerated growth, which Emerson will no longer be part of. The investor should weigh the benefits of a streamlined portfolio against the potential opportunity costs of exiting a growing market segment.
The divestiture highlights Emerson's decision to enhance its focus on automation technologies. Automation is an evolving field with advancements in AI, machine learning and robotics reshaping industries. Emerson's focus on these areas suggests a forward-looking strategy aimed at capturing opportunities in smart manufacturing, process automation and industrial IoT.
As automation technologies become more integrated into industrial processes, companies like Emerson that concentrate resources on innovation in this sector stand to benefit. However, the transition may come with initial costs and require substantial R&D investments. Stakeholders should monitor how these investments translate into marketable products and services, which would ultimately impact Emerson's competitive positioning and financial performance.
Transaction Represents Important Simplification Milestone in Emerson's Portfolio Transformation
"This transaction is a key step to simplify our portfolio and enhance Emerson's focus as a global leader in automation," said Lal Karsanbhai, President and Chief Executive Officer of Emerson. "We believe now is the right time to execute our plans to fully exit the Copeland business. This agreement with Blackstone provides certainty and portfolio simplification to Emerson shareholders, while enhancing our focus on executing in our attractive, high growth automation markets."
"We appreciate Emerson's partnership and are pleased to reach this agreement to acquire full ownership of Copeland," commented Joe Baratta, Global Head of Blackstone Private Equity. "Copeland has a world-class team that is helping lead the transition to more energy efficient heating and cooling solutions – and we are excited to continue supporting its accelerated growth in the years ahead."
The transactions have been unanimously approved by Emerson's Board of Directors and are expected to close in the second half of calendar year 2024, subject to regulatory approvals and customary closing conditions. The transactions are expected to result in a net pretax gain of approximately
A wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) and GIC will invest alongside Blackstone as part of the transaction.
Advisors
Davis Polk & Wardwell LLP served as legal advisor and Goldman Sachs & Co. LLC served as exclusive financial advisor to Emerson. Joele Frank, Wilkinson Brimmer Katcher served as investor relations advisor to Emerson. Barclays served as lead financial advisor and Simpson Thacher & Bartlett LLP acted as legal counsel to Blackstone and Copeland. RBC Capital Markets, LLC also provided financial advisory services to Blackstone and Copeland. Debt financing related to the transaction is being led by RBC Capital Markets, LLC, Barclays, Goldman Sachs Bank
About Emerson
Emerson (NYSE: EMR) is a global technology and software company providing innovative solutions for the world's essential industries. Through its leading automation portfolio, including its majority stake in AspenTech, Emerson helps hybrid, process and discrete manufacturers optimize operations, protect personnel, reduce emissions and achieve their sustainability goals. For more information, visit Emerson.com.
About Blackstone
Blackstone is the world's largest alternative asset manager. We seek to deliver compelling returns for institutional and individual investors by strengthening the companies in which we invest. Our more than
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 scope, duration and ultimate impacts of the
Emerson uses our Investor Relations website, www.Emerson.com/investors, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts and social media. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.
Contacts
For Emerson:
Investors:
Colleen Mettler
(314) 553-2197
Media:
Joseph Sala / Greg Klassen
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
For Blackstone:
Matt Anderson
Matthew.Anderson@blackstone.com
(212) 390-2472
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SOURCE Emerson
FAQ
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