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Rockwell Rejects Ongoing Emerson Takeover Bids

Oct. 31, 2017
In a financial and manufacturing story focused on the Midwestern hubs of St. Louis and Milwaukee, Emerson Electric Co. has reportedly offered during recent months to purchase Rockwell Automation Inc.

Not every corporate takeover story takes place on the coasts.

In a financial and manufacturing story focused on the Midwestern hubs of St. Louis and Milwaukee, Emerson Electric Co. has reportedly offered during recent months to purchase Rockwell Automation Inc.

According to various media reports, Emerson, which is headquartered in Ferguson, Missouri, has offered as much as $215 per share, about $27.5 billion total in cash and stock, for Rockwell, which is headquartered in Milwaukee. Rockwell has repeatedly rejected the takeover bids, opting for now to remain independent.

Emerson first presented the idea of a takeover in August, when it offered Rockwell a reported $200 per share, about a 20.61% premium over Rockwell’s peak close during the month of $165.82. Shares of Rockwell increased 9.59% in September, from $162.62 to $178.21. As news of the takeover bids spread Tuesday, shares peaked at $210.66, a 12.77% jump from its close Monday.

Emerson shares, meanwhile, dropped about 4.00% to $64.62.

Rockwell, which recorded about $5.88 billion in sales in 2016 and employs about 22,000 people, has been in transition since April 2016, when its board of directors announced Blake Moret, a Rockwell veteran who started with the company in 1985, would succeed Keith Nosbusch as CEO.

“The investment in our technology, in our people, is really more about model changes than it is about the raw units being sold,” Moret said in an interview with IndustryWeek late last year, not long after he started his new role. “For the moment we’ve got good visibility on a healthy pipeline of projects.”

Emerson, meanwhile, appears to remain entrenched in its goal to consolidate the automation industry and gain an advantage over European leaders like ABB Inc., Schneider Electric SE and Siemens AG.

Emerson, which reported $20.32 billion in adjusted basis performance sales last year and employs more than 110,000 people — just shy of five times as many as Rockwell — has recently been restructuring its operations to drive cost out of the company while operating in what it calls a “continued weak, low-growth global environment.”

“Over the past two decades, we’ve employed a regional approach to ensure that products sold in a country were also manufactured in that country,” CEO David Farr said earlier this year. “We’re proud to say that over 80% of products we sell in the United States were manufactured in the United States — and this is a strategy we mirror across the globe. We’ve considered this a crucial element of being a successful multinational company with deep U.S. roots.”

Where do those philosophies leave the two Midwestern companies now? Emerson could redouble its effort to acquire Rockwell, though the cost will certainly continue to increase after the stock spike earlier today. And Rockwell can reap the financial benefits and attention with further expansion.

If the companies do wind up together, at least one report, from David Faber of CNBC, indicates the name will change, perhaps to something along the lines of Emerson Rockwell.

Beyond that, the possibilities of another American conglomerate — formed from a pair of century-old-plus companies — on the global stage are intriguing. Just don’t hold your breath.

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