No third time charm for Emerson’s $38bn takeover bid of Rockwell Automation

There will unlikely be more bids from Emerson but there may be other suitors.

Last week, Rockwell Automation rejected a third bid offer valued at US$29 billion (A$38 billion) from Emerson Electric. Rockwell said that the proposal, which was unsolicited, did not match the value of the company and the bid did not outweigh the risks for an acquisition to happen. The third bid followed two earlier bids this year

Emerson announced last week that its chairman and CEO, David Farr, had sent a letter to Rockwell Automation president and CEO, Blake Moret, proposing to acquire all outstanding shares of Rockwell for US$225 per share, consisting of US$135 per share in cash and US$90 per share in Emerson shares. The total enterprise value of the transaction was reportedly approximately US$29 billion.

Moret said, “The Rockwell Automation Board and management team are confident in the Company, our strategic direction, and our ability to continue delivering exceptional share owner returns and value creation in excess of Emerson’s proposal, particularly given the weakened position and dis-synergies that would result from combining our two organisations, and the risks associated with Emerson’s stock-based currency. Bigger is not always better for driving growth and value creation.”

As a another reason for the board’s decision to reject the acquisition bid, Moret also pointed out while Emerson may see this proposed acquisition as necessary to enhance its growth and earnings potential and expand its capabilities in the industrial automation and information market, Rockwell does not because he believes that they We have all the necessary capabilities to continue to thrive in the market.

According to market watchers, it is reported that the third bid will most see the end of talks for talks between the companies. This is following Rockwell’s rejections of Emerson’s two previous tie-up proposals although there may still be interest from other suitors in the market.

Rockwell is the manufacturer and solutions provider of motor and industrial automation, control and power systems while Emerson’s core business is in technology and engineering services that includes measurement instruments and transmission.