Emerson Announces Acquisition of NI Instruments in the United States, Further Enhancing Its Global Automation Leadership Position



Nov 2, 2023

  The future transformation of Emerson’s product portfolio is to achieve technological diversification in testing and measurement automation

  Provide enhanced automation and scalability capabilities in a diverse and high growth discrete terminal market

  Create significant opportunities for shareholder value growth through cost synergy of $165 million

  Accelerate basic sales growth, increase gross profit margin, achieve adjusted revenue growth in the first year of transaction completion, and meet agreed return standards

  Emerson reiterated the outlook announced for the second quarter

  Emerson will hold a conference call today at 8:30am Eastern Time/7:30am Central Time to discuss trading matters

  St. Louis, Missouri and Austin, Texas (April 12, 2023) – Emerson (New York Stock Exchange code: EMR) and Eni Instruments (NASDAQ code: NATI, hereinafter referred to as “NI”) today announced that they have signed a final agreement to acquire NI for $60 per share in cash, with a total equity value of $8.2 billion. Emerson already owns approximately 2.3 million shares of NI Company, accounting for approximately 2% of its issued shares, which were acquired at a weighted average price of $36.84. Therefore, Emerson’s actual purchase price per share is $59.61.

  NI Company provides automated testing and measurement systems for software interconnection, helping enterprises to bring their products to the market at a lower cost and faster. NI’s solutions help customers solve current and future testing challenges, improving the speed and efficiency of their product development cycle. NI Company has a sales revenue of 1.66 billion US dollars in 2022, covering more than 40 countries worldwide. Its products serve approximately 35000 customers from the semiconductor and electronics, transportation, aerospace, and defense markets.

  We are pleased to have reached an agreement with NI Company, whose outstanding testing and measurement products and software capabilities have accelerated Emerson’s efforts to build a more cohesive, higher growth, and more profitable automation product portfolio, “said Lal Karsanbhai, Emerson President and CEO.

  Emerson has enhanced its automation capabilities through this expansion into the testing and measurement fields, while also gaining a wider range of users through NI’s solutions at key points in the product development cycle. These capabilities enable Emerson to achieve industry diversification in attractive and growing discrete markets such as semiconductors and electronics, transportation and electric vehicles, aerospace and defense, and these markets are also expected to grow in the long term Benefiting from long-term trends. NI’s business is highly aligned with our vision for automation, and we look forward to working together to provide our customers with more mature and innovative solutions, accelerating growth while fulfilling Emerson’s commitment to creating more value for shareholders

  In the past few months, we have been evaluating strategic choices for the future of our business in order to maximize value, “said Eric Starkloff, CEO of NI.

  We have initiated a strong and comprehensive process, considering various potential options, and ultimately believe that this is the best outcome for all stakeholders of the company. This transaction is a strong proof of the improvements and initiatives we have implemented in recent years, transforming NI Company into a software company with higher growth, stronger profitability, and shorter periodicity. We are very pleased that Emerson recognizes the value we create and believes in it Emerson will continue to build on the current development momentum of the company and further position NI as a leading supplier of software interconnection, automated testing, and measurement systems

  Strong strategic and financial reasons

  A balanced and diverse end market: The testing and measurement market has a long-term positive development momentum, and the significant potential market value is expected to reach 35 billion US dollars. This is a rapidly growing and highly complementary market, and also one of the four priority areas for expansion proposed by Emerson at the 2022 Investor Conference. This transaction is expected to drive value creation and enhance Emerson’s global automation leadership position by expanding and diversifying its customer base in attractive end markets. NI Company, with its diversified end market portfolio in fields such as semiconductors and electronics, transportation, aerospace, and defense, is expected to fully grasp the trend of providing attractive growth opportunities. In the field of semiconductor and electric vehicle manufacturing, NI assists Emerson in expanding its coverage in the product lifecycle design and verification stages, accelerating the delivery process to customers. Overall, NI will increase Emerson’s end market share in the discrete market to 18% of sales, making the discrete market Emerson’s second largest industry segment.

  Complementary software and innovation capabilities: NI has an industry-leading intelligent device, control, and software technology system that complements Emerson’s existing technology system and accelerates Emerson’s process of creating higher value and more cohesive industrial technology combinations. NI’s flexible and modular system level testing solution has an open and interoperable software platform. This is a key differentiation factor that enables customers to continuously improve and automate their testing processes in an increasingly complex and rapidly changing end market. The 20% share of NI’s software sales also increases Emerson’s likelihood of obtaining high growth industrial software opportunities. Emerson and NI’s engineering technology culture are both centered around innovation. With Emerson’s solid performance in innovation and new product launches, the merged company will be able to leverage the complementary expertise of the two companies to accelerate and expand customer innovation product development.

  Utilizing significant synergies: By applying the best practices of Emerson’s management system, Emerson identified a cost synergy opportunity of $165 million at the end of the fifth year. Emerson plans to drive improvements in production efficiency, streamline repetitive costs in comprehensive and administrative, sales and marketing, and R&D functions, while leveraging the company’s scale advantages in manufacturing and supply chains. Through reliable and excellent operations and productivity leverage, NI’s ability to generate free cash flow is also expected to be further enhanced.

  Stable financial condition and attractive shareholder returns: This transaction is expected to immediately increase adjusted earnings per share and improve the company’s long-term financial goals outlined at the 2022 investor conference. NI’s strong position in an attractive and constantly growing market is expected to drive sustainable basic sales growth, consistent with Emerson’s basic growth target of 4% -7% for the entire cycle. NI Company has also brought significant recurring revenue and direct gross profit margin growth to the merged Emerson product portfolio. The combination of strong growth, attractive gross profit margins, and the synergistic potential to expand operating profit margins all contribute to returns meeting Emerson’s agreed upon return standards.

  Unity and Corporate Culture: NI’s culture revolves around innovation and problem-solving, highly complementary to Emerson’s goal driven culture of innovation. Employees will receive more career development and promotion opportunities within Emerson.

  Transaction Terms and Approval

  Both Emerson and NI’s board of directors have approved this transaction. According to the terms of the agreement, NI shareholders will receive $60 in cash per share, which is 49% higher than the closing price of the company’s shares on January 12, 2023 (the day before the company’s strategic review).

  It is expected that this transaction will be delivered by Emerson in the first half of the 2024 fiscal year, subject to the completion of regular delivery conditions, including regulatory approval and NI company shareholder approval. Emerson expects to use existing cash and working capital to fund this transaction, including approximately $8 billion in post tax income from the announcement in October 2022 of the sale of a majority stake in Environmental Optimization Technology to Blackstone Group. The above transaction is expected to be delivered in the second calendar quarter of 2023.

  Emerson reiterates its financial outlook for the second quarter of the 2023 fiscal year

  On February 8, 2023, Emerson proposed a basic sales growth forecast of 8% to 10% for the second quarter of its continuing operations, with an adjusted earnings per share forecast of $0.95 to $1.00. Emerson reconfirmed the above expectations.

  Investor conference calls and reports

  Emerson management will discuss this transaction during an investor conference call starting today (April 12, 2023) at 7:30am Central Time/8:30am Eastern Time, which can be replayed on the website within 90 days after the conference call ends. The conference call slides will be released in advance.

  NI Company plans to release its first quarter results for the 2023 fiscal year after the market closes on April 27, 2023. Considering that Emerson’s acquisition of NI is still ongoing, NI will not hold a conference call on its first quarter results.


  Goldman Sachs&Co. LLC and Central Partners LLC serve as financial advisors to Emerson, while Davis Polk&Wardwell LLP serves as Emerson’s legal advisor. BofA Securities serves as the exclusive financial advisor to NI, while Wachtell, Lipton, Rosen&Katz serve as legal advisors to NI.

  About Emerson

  Emerson (New York Stock Exchange Code: EMR) is a global technology and software company headquartered in St. Louis, Missouri, providing innovative solutions for customers in the industrial, commercial, and residential markets. As a leading enterprise in the field of industrial automation, Emerson helps process, hybrid, and discrete industry manufacturers optimize operations, ensure personnel safety, reduce emissions, and achieve their sustainable development goals through automation solutions and AspenTech business. About ENAI Instruments in the United States

  At NI, we bring people, ideas, and technology together to assist forward-looking thinkers and creative problem-solvers in addressing humanity’s greatest challenges. From data and automation to research and validation, we provide customized, software interconnected systems that work with engineers and businesses every day to engineer ambitiously ™。

  National Instruments, NI, and ni.com, as well as Engineer Ambitious, are trademarks of National Instruments Corporation in the United States. All other products and company names listed are trademarks or trade names of their respective companies. (NATI-F)

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