Emerson Buys National Instruments For $8.2 Billion

Emerson (EMR) will buy National Instruments (NATI) for $8.2 billion, beating other suitors and nearly a year after its first unsuccessful bid.

Reuters reported Emerson beat other bids from companies such as Fortive Corp (FTV) and Keysight Technologies Inc (KEYS) with an offer to purchase National Instrument shares at $60 per share.

Emerson is a heavy engineering, software and technology company based in St. Louis. Austin-based National Instruments provides test equipment and software for engineers and scientists.

Just three months ago Emerson unveiled a hostile $7 billion bid for NI after several unsuccessful attempts to make the purchase. Emerson first approached NI in May last year with an offer of $48 per share. After refusing to work with Emerson toward a premium cash transaction, the global technology and software company made their interest public "for the benefit of all NI shareholders."

National Instruments shares were up 10% in intra-day trading at 2 p.m. ET, trading at an all-time high of about $57.90, inching closer to the acquisition price. Emerson shares were down about 1.3%.

Emerson already owned 2.3 million shares or about 2% of National Instruments. Using the weighted price for prior transactions, the effective acquisition price it will pay for the deal is $59.61 per share.

NI Conducted Comprehensive Review

National Instruments initially hesitated to accept the offer, saying it would pursue a "comprehensive review" that would include interest from other possible buyers "rather than negotiate exclusively with Emerson, which NI believes would be detrimental to shareholder interests."

After today’s announcement, NI’s Chief Executive Officer Eric Starkloff said, “Over the past several months, we've been evaluating strategic options for the future of our business with the intent to maximize its value. We ran a robust and comprehensive process, considered a range of potential options, and believe this represents the best outcome for all NI stakeholders.”

Good News For National Instruments Shareholders

The agreement is good news for shareholders, who should expect to see healthy returns as a result. Strong growth, attractive gross margins, and synergistic potential for increasing operating margins will all contribute to achieving Emerson's communicated returns targets.

The Boards of Directors of Emerson and NI have approved the transaction. In accordance with the agreement, NI shareholders will receive $60 per share in cash, representing a 49% premium to NI's closing share price on Jan. 12, the day before the strategic review was announced. The transaction is expected to close in the first half of Emerson's fiscal 2024, subject to regulatory approvals and shareholder approvals. 

The transaction will be financed with cash and liquidity, including the $8 billion post-tax proceeds from the majority sale of Climate Technologies to Blackstone announced in October 2022, which is expected to close in the second quarter of 2023. In addition, Emerson sold its waste disposal equipment and hot water dispensers division to Whirlpool Corp (WHR) and merged its software units with smaller rival Aspen Technology (AZPN).