Item 1.01 Entry into a Material Definitive Agreement.
On October 30, 2022, Emerson Electric Co., a Missouri corporation (“Emerson”),
BCP Emerald Aggregator L.P. (“BCP Emerald”), a Delaware limited partnership formed by investment funds managed by affiliates
of Blackstone Inc., Emerald Debt Merger Sub L.L.C., a Delaware limited liability company and wholly owned subsidiary of BCP Emerald and
Emerald JV Holdings L.P., a Delaware limited partnership and a wholly owned subsidiary of Emerson (“JV NewCo”), entered
into a Transaction Agreement (the “Transaction Agreement”). Upon the terms and subject to the conditions set forth
in the Transaction Agreement, at the closing (the “Closing”) of the transactions contemplated by the Transaction Agreement,
(i) JV NewCo will hold Emerson’s Climate Technologies business, (ii) Emerson will receive cash proceeds of approximately $9.5 billion
and one or more senior unsecured notes issued by a direct or indirect wholly owned subsidiary of JV NewCo (the “Seller Note Issuer”)
in an aggregate principal amount of $2.25 billion and described further below (the “Seller Note”), (iii) Emerson will
retain a 45% common equity interest in JV NewCo and (iv) BCP Emerald will acquire a 55% common equity interest in JV NewCo and convertible
preferred equity of JV NewCo with an initial liquidation preference of $2 billion (the “Preferred Security”).
The obligation of the parties to consummate the Closing is subject
to the satisfaction or waiver of customary conditions, including, among other things, the receipt of applicable regulatory approvals and
the expiration or termination of applicable waiting periods. The Transaction Agreement contains certain termination rights for each of
Emerson and BCP Emerald, including the right of each party to terminate the Transaction Agreement if the Closing has not been consummated
by October 31, 2023. The Transaction Agreement provides for the payment by BCP Emerald to Emerson of a termination fee in the amount of
$550 million if the Transaction Agreement is terminated in certain circumstances described in the Transaction Agreement, including if
Emerson terminates the Transaction Agreement in the event that BCP Emerald does not consummate the Closing when it is required to do so.
The Transaction Agreement contains customary representations and warranties
by each party. The parties have also agreed to various customary covenants and agreements, including, among others, an obligation of Emerson
to conduct, subject to certain exceptions, the Climate Technologies business in the ordinary course consistent with past practice during
the period between the execution of the Transaction Agreement and the Closing.
The Seller Note will be issued by the Seller Note Issuer at the Closing,
in an aggregate principal amount of $2.25 billion. The Seller Note matures ten years from the date of issue, accruing interest at 5% per
annum, which shall be payable in kind (by way of capitalization of interest on a semi-annual basis) until the Seller Note is repaid in
full, in cash. The Seller Note will rank senior in payment to any existing and future indebtedness of the Seller Note Issuer. The Seller
Note shall include a mandatory prepayment requirement in the event of a change of control of the Seller Note Issuer. The JV Agreements
will provide that upon an initial public offering (an “IPO”) of JV NewCo (or
a substitute entity) that meets certain agreed criteria (a “Qualified IPO”)
the Seller Note shall be repaid in full. In the case of an IPO that does not meet the Qualified IPO criteria (a “Non-Qualified
IPO”), the Seller Note will remain outstanding; provided that JV NewCo shall not make any distributions or pay any dividends
until the Seller Note has been repaid in full.
At the Closing, Emerson, BCP Emerald and JV NewCo will enter into a
limited partnership agreement with respect to JV NewCo and a limited liability company agreement with respect to the general partner of
JV NewCo (in the forms as they have been agreed at signing of the Transaction Agreement, the “JV Agreements”) and Emerson
and JV NewCo will enter into a transition services agreement, among other agreements as described in the Transaction Agreement.
The JV Agreements will provide, among other things, (i) that Emerson
will have the right to designate a minority of the members of the board of managers of JV NewCo and the right to consent to certain material
actions of JV NewCo, in each case for so long as Emerson maintains certain ownership percentages and (ii) for the ways in which Emerson
and BCP Emerald can each exercise certain liquidity rights with respect to the equity of JV NewCo that they own respectively, and the
transfer restrictions Emerson is subject to.
IPO of JV NewCo.
Pursuant to the JV Agreements, Emerson shall have the right to require
JV NewCo to consummate Qualified IPO after the fifth anniversary of the Closing and BCP Emerald shall have the right to require JV NewCo
to consummate a Qualified IPO after the second anniversary of the Closing. Each of Emerson and BCP Emerald shall have the right to require
JV NewCo to consummate a Non-Qualified IPO after the seventh anniversary of the Closing. If Emerson makes a demand for JV NewCo to consummate
an IPO (whether a Qualified IPO or a Non-Qualified IPO), BCP Emerald shall have a right of first offer to purchase all of the common equity
that Emerson owns.
The JV Agreements provide that certain volume-related transfer restrictions
will apply to Emerson following an IPO of JV NewCo, through a priority sell-down right granted to BCP Emerald, until BCP Emerald has received
an agreed amount of sale proceeds.
The Preferred Security may convert in an IPO to common equity. If the
Preferred Security is not converted to common equity in connection with an IPO, it shall instead convert to a cash-pay security with the
same liquidation preference and continue to accrue interest.
Sales of Equity of JV NewCo.
Pursuant to the JV Agreements, Emerson shall have the right to sell
50% of the common equity of JV NewCo that it owns to a third party after the second anniversary of the Closing and the right to sell 100%
of the common equity of JV NewCo that it owns to a third party after the fifth anniversary of the Closing, subject, in each case, to certain
restrictions and a right of first offer in favor of BCP Emerald.
BCP Emerald shall have “drag-along” rights under the JV
Agreements in respect of a sale of JV NewCo that constitutes a change of control. BCP Emerald may exercise these rights to require Emerson
to sell its equity in JV NewCo alongside BCP Emerald at any point, but BCP Emerald can only exercise such rights prior to the second anniversary
of the Closing if Emerson receives a specified minimum return.
Each of Emerson and BCP Emerald shall have customary “tag-along”
rights under the JV Agreements in respect of sales of certain direct or indirect interests in the common equity of JV NewCo prior to an
IPO.
The foregoing description of the Transaction Agreement and related
documents does not purport to be complete, and is qualified in its entirety by reference to the full text of the Transaction Agreement,
which is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Transaction Agreement has been attached to provide
investors with information regarding its terms. It is not intended to provide any other factual information about Emerson or any of the
other parties to the Transaction Agreement. In particular, the assertions embodied in the representations and warranties contained in
the Transaction Agreement are qualified by information in confidential disclosure schedules provided by the parties in connection with
the signing of the Transaction Agreement. These confidential disclosure schedules contain information that modifies, qualifies and creates
exceptions to the representations and warranties and certain covenants set forth in the Transaction Agreement. Moreover, certain representations
and warranties in the Transaction Agreement were used for the purpose of allocating risk among the parties rather than establishing matters
as facts and were made only as of the date of the Transaction Agreement (or such other date or dates as may be specified in the Transaction
Agreement). Accordingly, the representations and warranties in the Transaction Agreement should not be relied upon as characterizations
of the actual state of facts about Emerson or any of the parties to the Transaction Agreement.