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Rockwell Automation rejects $27bn bid from Emerson

01 November, 2017

Rockwell Automation has revealed that it has rejected at least two attempts by Emerson to acquire its business. In August, Emerson made an unsolicited bid, offering $200 per Rockwell Automation share, with approximately half of the offer in cash and half in Emerson shares. After Rockwell rejected this bid, Emerson made an increased offer on 10 October, consisting of $107.50 per share in cash and 225 million shares of Emerson common stock, worth about $107.50 per share.

This second bid, valuing Rockwell at around $27.6bn, was also rejected. Rockwell says that its board of directors reviewed the proposals “carefully”, but decided unanimously that they were not in the best interest of Rockwell Automation or its shareholders.

Blake Moret, Rockwell’s president and CEO says: “The Rockwell Automation Board of Directors and management team are committed to serving the best interests of the company and Rockwell Automation shareowners, and are confident in the company’s strategic direction and our ability to continue delivering superior levels of growth and value creation.”

Emerson has confirmed that it made a private offer to Rockwell Automation proposing a combination of the two companies. It adds that there are currently no discussions between the two companies, and that it will only pursue transactions that are in the best interests of its shareholders. It has refused to comment on whether it will make a new bid for Rockwell.

Analysts suggest that one reason that Emerson is interested in Rockwell is to reduce its exposure to volatile energy prices. According to a Reuters report, sources within Rockwell expressed doubts about the value of synergies from a tie-up with Emerson, and about Emerson’s record of integrating acquisitions.

Rockwell Automation CEO Blake Moret: confident in strategic direction

In the past three years, the value of Rockwell Automation’s shares has climbed by 79%, while Emerson’s have increased by less than 1%.

If an Emerson bid for Rockwell were to succeed, it would mean that it would re-enter areas of discrete automation such as variable-speed drives which it abandoned last year when it sold its Controls Techniques and Leroy-Somer businesses to the Japanese firm, Nidec for $1.2bn.

Rockwell Automation is the world's largest company dedicated to industrial automation and information. Headquartered in Milwaukee, Wisconsin, it employs about 22,000 people in more than 80 countries.

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