Emerson Electric aims to merge two of its software businesses, OSI and Geological Simulation Software, with Aspen Technology in an $11 billion deal. The cash-and-stock transaction values the new company at $160 a share, the Wall Street Journal reports.
The purchase price represents a 27% premium to Aspen Technology’s (AspenTech) closing share price before the reported merger. The new entity would retain AspenTech’s name and AspenTech CEO Antonio Pietri would lead it.
AspenTech’s shareholders would receive $87 and 0.42 shares of the combined company for each share, the report said, citing company officials. Emerson would contribute $6 billion in cash as part of the deal and own 55% of the new entity. AspenTech shareholders would own the rest.
Emerson acquired OSI was acquired in 2020 for $1.6 billion, and Geological Simulation Software accounts for $300 million of the automation segment’s $12 billion annual revenue.
Clients would utilize the combined company’s offerings to design industrial systems and to run, repair, and analyze them. AspenTech manufactures software for companies in the mining, manufacturing, and pharmaceutical industries and recorded $700 million of revenue for fiscal year 2021. Emerson, a giant industrial conglomerate, manufactures products ranging from Ridgid pipe wrenches to software for power plants commanding a market value of around $58 billion.
The companies have had a commercial partnership since 2018.
Pietri and Emerson CEO Lal Karsanbhai charted out the deal in July, partly concluding it as better positioned for further acquisitions.
Emerson’s remaining business would include the rest of its automation division, climate controls, such as heating- and air-conditioning equipment, and tools and home products such as thermostats and garbage disposals.
Price Action: AspenTech shares were trading at more than $154 per share at 12:25 p.m. Eastern Daylight Time.
This story originally appeared on Benzinga. © 2021 Benzinga.com.
Benzinga does not provide investment advice. All rights reserved.