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Emerson buys NI for $8.2bn to expand into T&M automation
Emerson is buying and National Instruments in a transaction that values NI at $8.2bn. The aim is to expand its activities to include test and measurement automation and to target high-growth markets.
Emerson’s president and CEO, Lal Karsanbhai, says that NI’s “best-in-class” test and measurement product and software offerings will accelerate Emerson's progress toward “a cohesive, higher growth and higher margin automation portfolio”.
“With this expansion into test and measurement, Emerson will enhance its automation capabilities and gain a broader set of customers that relies on NI's solutions at critical points along the product development cycle,” he adds. “These capabilities provide Emerson industry diversification into attractive and growing discrete markets like semiconductor and electronics, transportation and electric vehicles, and aerospace and defence that are poised to benefit from secular growth trends.
“NI's business is well-aligned with our vision for automation and we look forward to working together to bring more comprehensive and innovative solutions to our customers, accelerate growth and position Emerson to deliver significant shareholder value.”
In 2022, NI generated revenues worth $1.66bn in 2022. In addition to its T&M automation activities, TI’s portfolio includes its CompactRio signal-conditioned I/O modules, machine vision systems, industrial communications, HMIs and displays, and systems for measuring measure linear and rotary displacement.
“Over the past several months, we’ve been evaluating strategic options for the future of our business with the intent to maximise its value,” says NI’s CEO, Eric Starkloff. "We ran a robust and comprehensive process, considered a range of potential options, and believe this represents the best outcome for all NI stakeholders.”
Benefits that Emerson expects from the deal include:
Diversified end-markets: The $35bn test and measurement market is fast-growing and complementary with good long-term trends. The transaction is expected to advance Emerson’s position as an automation leader by expanding and diversifying its customer base in end-markets including semiconductor and electric vehicle manufacturing. It will increase Emerson’s exposure in discrete markets to 18% of sales, making it the company’s second-largest industry segment.
Complementary software and innovation capabilities: NI’s intelligent devices, controls and software complement Emerson's own technologies and will accelerate its efforts to create a higher value, cohesive industrial technology portfolio. NI's flexible, modular test systems have an open, interoperable software platform – a differentiator that allows customers to evolve and automate their test processes in increasingly complex and fast-changing end-markets. With 20% of its sales in software, NI also increases Emerson's exposure to high-growth industrial software opportunities.
Synergies: Emerson has identified $165m of potential cost synergies within five years.
Attractive returns: The transaction is expected to add immediately to Emerson’s adjusted EPS and long-term financial targets. NI’s strong positions in attractive and growing markets are expected to deliver sustainable underlying growth.
Aligned company cultures: Emerson says that NI’s innovation and problem-solving focused culture complements its own “purpose-driven” culture, whiuch is focused on innovation.
The transaction is expected to close in the first half of Emerson's 2024 fiscal year.
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