UPDATE: Emerson Electric To Buy Avocent For $1.2 Billion
October 06 2009 - 11:34AM
Dow Jones News
Diversified industrial equipment maker Emerson Electric Co.
(EMR) will acquire information-technology company Avocent Corp.
(AVCT) for about $1.2 billion in cash, broadening the software
offerings of Emerson's energy efficiency-related businesses.
Emerson plans to apply Avocent's software management technology
to its network power systems, energy management and precision
cooling services.
"Clearly, this adds a little bit more power to Emerson's network
power systems" business, said Daniel Holland, an analyst for
Morningstar Inc. "Having a pretty broad portfolio offering helps
get a customer more interested."
Avocent shareholders will get $25 a share, a 22% premium to
Monday's close. The deal, which was unanimously recommended by the
Avocent board, is expected to be completed around year-end if it
gets approval from regulators and a majority of Avocent
shareholders. The stock was last at $25 in August 2008.
In Tuesday trading, Avocent shares were up 21% at $24.83 a
share.
The Huntsville, Ala., company blends server hardware, software
and embedded technologies into one system that data-center
operators use to monitor, manage and fix problems with their
operations. The company has been trying to boost sales of software
that aren't tied to the company's computer servers. About 30% of
the Avocent's $647 million of revenue last year was derived from
software.
Demand for servers has fallen sharply in recent quarters as
companies cut back on capital spending. Sales in Avocent's
management systems segment, which includes its hardware lines,
declined 28% in the second quarter.
For the first six months of 2009, Avocent lost $63.2 million, or
$1.42 a share, as sales slipped 15% from a year earlier to $254.7
million.
Emerson shares were recently trading up 3.3% at $39.97 a share
The stock is up 9% so far this year as the company has reported
lower earnings the past three quarters amid falling demand.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
(Joan E. Solsman contributed to this report)