Emerson Acquires NI

This article appeared in Power & Motion and has been published here with permission.

*This article was originally published in January 2023 and updated April 19 with new information.

Emerson announced on April 12 its entry into a definitive agreement to acquire NI (formerly known as National Instruments). It currently owns about 2.3 million shares of NI.

The acquisition of NI and its software-connected automated test and measurement systems will help to enhance Emerson's automation capabilities said Lal Karsanbhai, President and Chief Executive Officer of Emerson, in the company's press release announcing the acquisition.

"Emerson will...gain a broader set of customers that relies on NI's solutions at critical points along the product development cycle. These capabilities provide Emerson industry diversification into attractive and growing discrete markets like semiconductor and electronics, transportation and electric vehicles, and aerospace and defense 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," said Karsanbhai.

Emerson first announced its plans to acquire NI on January 17, as reported by Control Design, an affiliate publication to Power & Motion. At that time, NI was valued at more than $7.6 billion. The public nature of the bid was unusual, but reflected Emerson’s interest in NI, according to Karsanbhai.

"We have long admired NI and believe that combining its best-in-class electronic test and measurement product and software offerings with Emerson’s industry-leading automation technology and software would enhance our ability to bring comprehensive solutions to a diverse set of end markets," he said.

The final agreed upon price for NI was $8.2 billion.

Merger Brings Market, Technological Benefits

Eric Starkloff, Chief Executive Officer of NI, said the company has spent the last several months evaluating the future of its business and how to drive further value. After considering a range of options, the company feels the acquisition by Emerson provides the best outcome.

"This transaction is a strong testament to the improvements and initiatives we've implemented in recent years that have transformed NI into a software focused company with higher growth, better profitability and lower cyclicality. We're thrilled that Emerson recognizes the value we've created and we believe they will help us build on our momentum to further position NI as a leading provider of software-connected automated test and measurement systems."

In its press release announcing the acquisition, Emerson outlines the five key rationale's for the merger:

Balanced and Diversified End Markets - the company foresees test and measurement as a fast-growing market, and is an area it has previously outlined as one it would like to expand into. It will also bring more end markets into the company's portfolio, including semiconductor and electronics, transportation, and aerospace and defense. It is expected NI will help increase Emerson's end market exposure in discrete markets to 18% of sales, making it the company's second largest industry segment.
Complementary Software and Innovation Capabilities - Emerson sees NI's technology stack as complementary to its own as well as a way to further accelerate development of higher value, cohesive industrial technologies. NI's open and interoperable software platform will enable customers to more easily adapt their systems as technology continues to evolve. Both companies have a shared focus on innovation which will aid with the continued development of new solutions for a range of customers.
Sustainable Synergies - 5 years into the merger, Emerson sees $165 million in cost synergy opportunities through the application of its best practices. Among these will be productivity improvements and a streamlining of duplicate costs across business functions such as general and administrative, sales and marketing, and research and development. The companies will also be able to leverage Emerson's scale in manufacturing and supply chains.
Strong Financial Profile and Returns for Shareholders - Emerson expects the acquisition to immediately benefit short- and long-term financial goals. The company anticipates NI's strong market position will bring sustainable underlying growth that will aid with Emerson's growth target of 4-7%.
Unites Aligned Company Cultures - Bringing together the two companies' focus on innovation and problem solving is expected to help further drive future development efforts. Emerson also sees the merger providing expanded career development and advancement opportunities for employees.

The board of directors for both companies have approved the transaction which is expected to close in the first half of Emerson's fiscal 2024 up completion of customary closing conditions, including regulatory approvals.

Portions of this article originally appeared in Machine Design, an affiliate publication to Power & Motion.