Emerson to buy remaining stake in AspenTech for $7.2 billion

(Refiles story as Update 4)

By Sabrina Valle

(Reuters) -U.S. industrial company Emerson Electric agreed to pay $7.2 billion to buy the remaining shares in software supplier AspenTech that it does not already own, the companies said on Monday.

The takeout deal strengthens Emerson's transformation from its 1890 origins as a motor and fan manufacturer in St. Louis into an industrial technology company focused on factory floor automation.

Emerson agreed to pay proportionally more than the $6 billion it offered in 2022 to buy 55% of the software supplier, then valued at roughly $11 billion.

The $265 per share offer, which implies an enterprise value of $16.8 billion, also represents a premium of 10.4% from the $240 per share offered in November. Emerson currently owns 57% of AspenTech.

"Most investors ultimately expected this higher offer price and will likely view the announcement as a positive given its modest dilution impact," said Ken Newman, an analyst with the KeyBanc Capital Markets brokerage firm.

"Emerson's full ownership of AspenTech makes sense and should help the company strengthen its automation portfolio," Newman said in a note to clients.

Aspen's shares were up 3%, at $263, in afternoon trade.

TECH REVAMP

The deal follows other software acquisitions by centenary industrial companies such as Siemens and Rockwell Automation, as industrial clients seek to use digitalization and artificial intelligence to cut costs and increase productivity.

AspenTech provides a variety of systems for industrial use, from distribution management systems to geological simulation software.

Upon closing of the transaction, which is expected by June, AspenTech will become a wholly-owned subsidiary of Emerson.

Emerson plans to finance the acquisition with its existing cash on hand and debt financing.

Goldman Sachs and Centerview Partners are financial advisors to Emerson, while Qatalyst Partners and Citi are serving as independent financial advisors to AspenTech.

(Reporting by Sabrina Valle in New York and Utkarsh Shetti in Bengaluru; Editing by Shailesh Kuber and Rod Nickel)

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