Emerson To Acquire NI, Aims To Strengthen Leadership in Automation

April 26, 2023 by Stephanie Leonida

Emerson has announced its agreement to acquire NI, taking steps to expand its automation portfolio in test and measurement and expand its role as a global leader in automation.

Manufacturer and engineering services provider Emerson is making strides in expanding its role in test and measurement through its recent agreement to acquire the Austin-based corporation National Instruments (NI). Emerson will complete its takeover of NI at $60 per share, with NI's equity value at $8.2 billion.

With NI’s product portfolio and expertise, Emerson expects to grow its customer base and business, penetrating progressive markets such as aerospace and defense, e-mobility, and semiconductor and electronics.


With its acquisition of NI, Emerson expects to grow its business in aerospace and defense, e-mobility, and semiconductor and electronics. Image used courtesy of Emerson


Who Is NI?

NI produces and supplies software and hardware solutions for industrial automation markets and test and measurement sectors. The company's solutions are designed to work in conjunction with industry-standard workstations and personal computers to provide user-focused systems or “virtual instruments.” These instruments are key tools for developers and engineers as they fine-tune their experiments, research, and development to improve product/system quality and performance.


Growing Automation Excellence

The diversification of Emerson’s market through NI opens up a total available market or complete revenue opportunity of $35 billion. Emerson plans to expand its influence as a worldwide automation leader by growing its customer base and market reach. Sales are expected to jump up to 18 percent with penetration into progressive markets, becoming Emerson’s second biggest income source.

Emerson will build out its industrial technology offerings with NI’s complementary products, including its controls, devices, and intelligent software. Aligning with NI, Emerson’s own first for innovation is set to drive the development and commercialization of new offerings for its customers. With NI’s interoperable software platform for its test solutions, customers can change or modify test processes to find the optimum solution, adapting to oscillating market demand.


Synergy Opportunities and Continued Growth

When two companies come together like this, cost synergy opportunities can arise, such as optimization of supply chain management, minimizing procurement costs, and stripping away overlapping services or products. By removing products and services that are essentially duplicated, Emerson can cut costs associated with production and supply, concentrating on developing and producing new, more advanced technologies. Emerson calculated as much as $165 million in cost synergy opportunity savings could be made as year five comes to a close.


Emerson aims to achieve long term financial goals with acquisition of NI

Emerson aims to achieve long-term financial goals with the acquisition of NI. Image used courtesy of Wikipedia


The acquisition of NI is expected to support Emerson’s long-term financial goals and the company’s 4 to 7 percent through-the-cycle basal growth target. Emerson's gross margin is also expected to increase as a result of the merger. Gross margin describes the financial takings of a company once the cost of goods sold is subtracted. Overall, the merger is expected to bring attractive returns to Emerson, priming the company for continued growth.

NI and Emerson’s Board of Directors have approved the transaction, which is planned for completion in early 2024. This is subject to prevailing closing conditions, as well as regulatory and NI shareholder approvals.


Comprehensive Automation

Emerson’s acquisition of NI is set to open up a broader customer base for the former company and allow for continued expansion into progressive markets. With NI’s products and services, Emerson endeavors to cut development and production costs, continue advancing technological development and offer engineers and developers a holistic and comprehensive automation package.