Emerson Accelerates Industrial Software Portfolio Through New Partnership Involving Aspentech
Emerson will receive 55% stake in AspenTech to push forward Emerson’s software investment strategy.
Emerson Electric Co. (Emerson) has a global presence in software, technology, and engineering. Emerson provides solutions to customers working within commercial, industrial, and residential markets.
Recently, they announced a definitive agreement with asset optimization software specialist, AspenTech. The companies will merge their software units to create an industrial software company that can keep up with various markets, including automotive, mining, chemicals, utility, and more. The transaction is expected to close in 2022 and is subject to approval by AspenTech shareholders, regulatory approvals, and other customary closing conditions.
Under the agreement, Emerson said that it will be contributing $6 million in cash to “new AspenTech.” AspenTech will receive this in exchange for 55% ownership of the new company. As well as retaining the original company name, the current CEO of AspenTech, Antonio Pietri, will be positioned as the CEO for the new AspenTech.
A diagram showing how Emerson plans to utilize AspenTech. Screenshot used courtesy of Emerson
AspenTech shareholders are to receive $87 per share in cash and 0.42 shares of common stock of the new AspenTech, for each share of AspenTech common stock they own. This comes to approximately $160 per AspenTech share and a deal transaction total of $11 billion.
New AspenTech is set to provide the industrial automation community with offerings centered upon the use of AI and the implementation of asset optimization. Emerson can now grow its business as it provides its customers with access to different software capabilities. Its grid modernization technology, advanced distribution management systems, and geological simulation software are among its offerings.
In a recent news release, Pietri commented, “Today’s announcement marks an exciting new era. This transaction enables us to advance our position as a premier, highly diversified industrial software leader poised for significant growth, strong financial performance, and a vehicle to drive future software acquisitions while providing immediate cash value to AspenTech shareholders.”
A breakdown of how AspenTech and Emerson will combine their software platforms. Screenshot used courtesy of Emerson
Pietri added, “The new AspenTech will benefit from a larger and more diversified market, which we will be able to serve with a comprehensive software portfolio, an expanded global sales channel, and an even stronger balance sheet reinforced by Emerson.”
Late last year, Emerson completed its acquisition of Open Systems International, Inc. (OSI Inc.) for $1.6 billion in an all-cash transaction. The company offers complimentary software and operations technology to allow Emerson to expand its reach into power transmission and distribution sectors.
OSI's SCADA software interface. Image used courtesy of OSI
This latest venture with new AspenTech will be a critical step in providing customers from new high-growth markets with improved safety, reliability, and production while reducing emissions. Emerson already has a range of software that enables simulation and planning for automotive, oil and gas, and other industries.
The new AspenTech company will build upon its OSI Inc. and Geological Simulation Software businesses. Emerson said that the software offered by new AspenTech would also support green energy markets such as biofuels, hydrogen, and carbon capture.