The leaders of Emerson Electric Co. on Tuesday said they have offered to buy for more than $7 billion testing and measurement company National Instruments Corp., the board of which on Friday said it had started a review of its strategic options.
Emerson’s announcement comes about eight months after the St. Louis-based company first offered in private to take over NI, which has about 35,000 customers and through last year’s first three quarters generated $100 million of net income on sales of nearly $1.1 billion. (Emerson is ranked 78th on the 2022 IndustryWeek 500 list of publicly traded U.S. manufacturers; NI ranked 459th.) After several rounds of communication that Emerson executives say were met with “only limited engagement” by NI, Emerson in November raised its offer by more than 10% but was rebuffed then and again last week before NI’s strategic review announcement.
In a reaction Tuesday, NI leaders said they will evaluate Emerson’s bid as part of that process and also will solicit other offers.
“NI determined to affirmatively initiate, announce and pursue a comprehensive strategic review process inclusive of other counterparties rather than negotiate exclusively with Emerson, which NI believes would be detrimental to shareholder interests,” a company statement read. “NI is focused on conducting its strategic review process in a manner that provides all interested parties with the opportunity to fairly participate on a level playing field, which we believe is the best way to ensure that the process can maximize value for all shareholders.”
On a conference call with analysts, Emerson President and CEO Lal Karsanbhai said NI’s testing businesses will be a good adjacent market for Emerson to grow into and and that it also connects well to a number of Emerson's current end markets. But he added that his team can better run NI than the management group that has been led by Eric Starkloff since early 2020. He and COO Ram Krishnan lauded NI’s broad customer base and pricing power but also pointed to recent product stumbles and higher research and development costs as areas where Emerson can improve NI’s performance.
“We have long admired NI and believe that combining its best-in-class electronic test and measurement product and software offerings with Emerson’s industry-leading automation technology and software would enhance our ability to bring comprehensive solutions to a diverse set of end markets, accelerating growth and positioning Emerson to create significant shareholder value,” Karsanbhai said in a statement.
Shares of NI (Ticker: NATI) popped nearly 13% on the morning of Jan. 17 to $52.95, just 5 cents below Emerson’s per-share offer. They had previously been essentially flat over the past six months. Emerson stock (Ticker: EMR) fell more than 6% to about $92; they are still up about 15% since the middle of last year, a move that has lifted its market capitalization to more than $53 billion.
