Emerson to Sell Network Power, Leroy-Somer, and Control Techniques
August 5, 2016
ST. LOUIS — Emerson announced an agreement to sell Network Power to Platinum Equity and a group of co-investors. The transaction is valued at $4 billion and Emerson will retain a subordinated interest in Network Power. The sale is expected to close by Dec. 31, 2016, subject to regulatory approvals. Emerson also announced it has agreed to sell its Leroy-Somer and Control Techniques business units to Nidec Corp. This transaction is valued at $1.2 billion and is expected to close by Dec. 31, 2016, subject to regulatory approvals.
Regarding the Network Power transaction, David N. Farr, chairman and chief executive officer of Emerson, said, “This agreement marks a major milestone in the strategic portfolio repositioning we announced last June. By selling Network Power to Platinum Equity, we have achieved a successful result for our shareholders as part of our plan to streamline Emerson to create a more focused company with significant opportunities for growth and profitability in our core served markets. We believe Network Power has a bright future ahead and Platinum Equity is well-positioned to help the company continue to thrive and realize its full potential.”
With revenue of approximately $4.4 billion in fiscal 2015, Network Power, based in Columbus, Ohio, is a leading provider of thermal management, ac and dc power, transfer switches, services, and information management systems for the data center and telecommunications industries.
“I’m very proud of the relationship and mutual trust that the Emerson and Platinum Equity teams have built with one another,” said Platinum Equity chairman and CEO Tom Gores. “Emerson is a world class company that we know shares our commitment to creating value, and this is an important investment in a business that will be a cornerstone in our portfolio. It plays to our core strengths. In addition to our capital resources, we will deploy our global operations skills to build on the foundation Emerson created and take this business to another level.”
Network Power will continue to be led by Scott Barbour, who has been executive vice president of Emerson and business leader for Network Power. Barbour said, “We firmly believe Platinum Equity is an ideal partner as we continue to drive efficiency in our operations and invest to bring innovative products and services to our customers. The work we’ve done at Network Power in recent years ensures we are well prepared for an ownership transition and have the right foundation in place to be successful.”
Regarding the Leroy-Somer and Control Techniques transaction, Farr said, “The Leroy-Somer and Control Techniques management teams and product leadership positions will provide a strong foundation for continued success under Nidec’s ownership. This announcement represents another step in our strategic repositioning to restructure and align our business amidst a challenging global macroeconomic environment. Upon completing the transaction, Emerson will be better positioned to accelerate growth and value creation over time, while Nidec will have a unique opportunity to strengthen its global motor presence and expand into drives and power generation. I am grateful to the employees of Leroy-Somer and Control Techniques for the strong and valuable performance they have provided for decades. We will work closely with Nidec to ensure a smooth transition for customers and employees.”
Leroy-Somer, headquartered in France, was acquired by Emerson in 1990. Control Techniques has been an Emerson business since 1995, and is based in the United Kingdom. For more than 30 years, Leroy-Somer and Control Techniques have been leading manufacturers and suppliers of alternators, drives, and motors, with approximately 9,500 employees around the world. The two businesses had combined fiscal year 2015 revenue of approximately $1.7 billion.