Next Step in Emerson Portfolio Transform
ation, Diversifying Technology Into Test and Measurement Automation
Provides Enhanced Automation Capabilities and Expansion Into Diverse, High-Growth Discrete End Markets
Significant Opportunities to Create Shareholder Value Through $165 Million of Cost Synergies
Accelerates Underlying Revenue Growth, Expands Gross Margins, Accretive to Adjusted Earnings in Year One and Meets Communicated Return Criteria
Emerson Reaffirms Second Quarter Guidance
Emerson to Host Conference Call to Discuss Transaction Today at 8:30 a.m. Eastern Time / 7:30 a.m. Central Time
ST. LOUIS and AUSTIN, Texas, April 12, 2023/ Emerson (NYSE: EMR) and NI (Nasdaq: NATI) today announced that they have entered into a definitive agreement. Under which Emerson will acquire NI for $60 per share in cash at an equity value of $8.2 billion. Emerson already owns approximately 2.3 million shares of NI, representing approximately 2% of shares outstanding. Which were acquired at a weighted average price of $36.84. As a result, Emerson’s effective per share purchase price is $59.61.
Furthermore, NI provides software-connected automated test and measurement systems. It enable enterprises to bring products to market faster and at a lower cost. NI’s solutions help customers solve current and future test challenges and improve speed and efficiency in their product development cycles. NI had $1.66 billion in 2022 revenue and operates in more than 40 countries, serving approximately 35,000 customers across semiconductor and electronics, transportation, and aerospace and defense markets.
“We are pleased to reach an agreement with NI, whose best-in-class test and measurement product and software. Offerings accelerate Emerson’s progress toward a cohesive, higher growth and higher margin automation portfolio,” said Lal Karsanbhai, President and Chief Executive Officer of Emerson. “With this expansion into test and measurement, Emerson will enhance its automation capabilities. Help gain a broader set of customers that relies on NI’s solutions at critical points along the product development cycle.
Emerson diversification
These capabilities provide Emerson industry diversification into attractive and growing discrete markets. Like semiconductor and electronics, transportation and electric vehicles. Aerospace and defense that are poised to benefit from secular growth trends. NI’s business is well-aligned with our vision for automation. We look forward to working together to bring more comprehensive and innovative solutions to our customers, accelerate growth and position Emerson to deliver significant shareholder value.
Moreover, Over the past several months, we’ve been evaluating strategic options for the future of our business with the intent to maximize its value,” said Eric Starkloff, NI’s Chief Executive Officer. We ran a robust and comprehensive process, considered a range of potential options, and believe this represents the best outcome for all NI stakeholders. This transaction is a strong testament to the improvements and initiatives we’ve implemented in recent years. As a result, that have transformed NI into a software focused company with higher growth, better profitability and lower cyclicality. We believe they will help us build on our momentum to further position NI as a leading provider of software-connected automated test and measurement systems.”
Compelling Strategic and Financial Rationale
Balanced and Diversified End Markets:
With favorable long-term trends and an estimated priority total addressable market of $35 billion. The test and measurement market is fast-growing, highly complementary. One of the four priority adjacencies Emerson presented at its 2022 Investor Conference. With a diversified end market mix including semiconductor and electronics, transportation, and aerospace and defense. In markets like semiconductor and electric vehicle manufacturing, NI expands Emerson’s reach into the design and validation phase of the lifecycle, providing early access to customers. Overall, NI will increase Emerson’s end market exposure in discrete markets to 18% of sales. Which will be Emerson’s second largest industry segment.
Complementary Software and Innovation Capabilities:
In addition, NI’s technology stack of industry-leading intelligent devices, controls and software complements. Emerson’s own technology stack and will accelerate Emerson’s efforts to create a higher value, cohesive industrial technology portfolio. NI’s flexible and modular system-level test solutions have an open and interoperable software platform, a key differentiator that enables customers to continually evolve and automate their test processes in increasingly complex and fast-changing end markets. With 20% of sales in software, NI also increases Emerson’s exposure to high-growth industrial software opportunities. Both Emerson and NI share innovation-focused engineering cultures. With Emerson’s proven track record of innovation and successful new product launches, the combined company will be able to accelerate and expand the development of innovative offerings for customers leveraging the complementary expertise of both organizations.
Delivers Substantial Synergies:
Emerson has identified $165 million of cost synergy opportunities by the end of year 5 through application of best practices from the Emerson Management System. Emerson intends to drive productivity improvements and streamline duplicative costs across general and administrative, sales and marketing, and research and development functions, while leveraging Emerson’s scale in manufacturing and supply chain.
Strong Financial Profile and Attractive Returns for Shareholders:
Similarly, The transaction is anticipated to be immediately accretive to adjusted EPS, aligning with Emerson’s long-term financial targets that were outlined at its 2022 Investor Conference. Emerson expects that NI’s strong positions in attractive and growing markets will deliver sustainable underlying growth that aligns with Emerson’s through-the-cycle underlying growth target of 4-7%. NI also brings significant recurring revenue and immediate gross margin accretion to the combined Emerson portfolio. The combination of strong growth, attractive gross margins and the synergy potential to expand operating margins all contribute to returns in line with Emerson’s communicated returns criteria.
Transaction Terms & Approvals
The transaction has been approved by the Boards of Directors of both Emerson and NI. Under the terms of the agreement, NI shareholders will receive $60 per share in cash. Which represents a 49% premium to NI’s closing share price as of January 12, 2023, the day prior to NI’s public announcement of a strategic review.
Besides, Subject to the fulfillment of customary closing conditions, the transaction is expected to conclude in the first half of Emerson’s fiscal year 2024. Which includes regulatory approvals and approval by NI shareholders. The financing of the transaction by Emerson will involve the utilization of available cash and liquidity, which comprises the anticipated post-tax proceeds of roughly $8 billion from the majority sale of Climate Technologies to Blackstone that Emerson declared in October 2022.
Emerson Reaffirms Second Quarter 2023 Guidance
On February 8, 2023, Emerson provided continuing operations second quarter underlying sales growth guidance of 8%-10% and adjusted earnings per share guidance of $0.95–$1.00. Emerson is reaffirming this guidance.
Investor Conference Call and Presentation
Emerson management will discuss the transaction during an investor conference call today, April 12, 2023, beginning at 7:30 a.m. Central Time / 8:30 a.m. Eastern Time. Participants can access a live webcast available at www.Emerson.com/en-us/investors at the time of the call. A replay of the call will be available for 90 days.
NI plans to release its first quarter fiscal year 2023 results after market close on April 27, 2023. Given the pending acquisition of NI by Emerson, NI will not host an earnings conference call for first quarter results.
Advisors
Goldman Sachs & Co. LLC and Centerview Partners LLC are serving as financial advisors to Emerson and Davis Polk & Wardwell LLP is serving as legal advisor. BofA Securities is serving as exclusive financial advisor to NI and Wachtell, Lipton, Rosen & Katz is serving as legal advisor.
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 NI
At NI, we bring together people, ideas and technology so forward thinkers and creative problem solvers can take on humanity’s biggest challenges. From data and automation to research and validation, we provide the tailored, software-connected systems engineers and enterprises need to Engineer Ambitiously™ every day.
National Instruments, NI and ni.com and Engineer Ambitiously are trademarks of National Instruments Corporation. Other product and company names listed are trademarks or trade names of their respective companies. (NATI-F)
Additional Information and Where to Find It
This communication relates to a proposed business combination transaction between Emerson and NI (the “Proposed Transaction”). This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. In connection with the Proposed Transaction, NI may file one or more proxy statement(s) or other documents with the SEC. This communication is not a substitute for any proxy statement NI may file with the SEC in connection with the Proposed Transaction.
Any definitive proxy statement (if and when available) will be mailed or otherwise made available to stockholders of NI.
Investors and security holders will be able to obtain free copies of these documents filed with the SEC. If and when available without charge through the website maintained by the SEC at www.sec.gov or, in the case of documents filed by NI, by directing a request to National Instruments Corporation, 11500 North Mopac Expressway, Austin, Texas 78759, Attention: Investor Relations; telephone (512) 683-5215, or from NI’s website www.ni.com, or, in the case of documents filed by Emerson, by contacting the investor relations department of Emerson:
Emerson
8000 West Florissant Avenue, P.O. Box 4100
St. Louis, MO
www.emerson.com/en-us/investors
Investor Relations:
Colleen Mettler, Vice President
(314) 553-2197
investor.relations@emerson.com
NI Directories
At last, NI and certain of its directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the Proposed Transaction. Information regarding NI’s directors and executive officers is available in NI’s proxy statement for the 2023 annual meeting of stockholders. Which was filed with the SEC on March 27, 2023. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests. By security holdings or otherwise, will be contained in the proxy statement(s) filed by NI and other relevant materials to be filed. With the SEC in connection with the Proposed Transaction when they become available.
