Emerson Electric Co. EMR announced yesterday that it will acquire Minneapolis, MN-based Open Systems International, Inc. The transaction has been valued at $1.6 billion in cash.
Subject to the satisfaction of closing conditions and the receipt of regulatory approvals, the acquisition is anticipated to consummate in fiscal 2021 (ending September 2021).
It is worth noting here that Emerson Electric’s share price decreased 1% yesterday, closing the trading session at $69.59.
Inside the Headlines
Open Systems is well-recognized for its enterprise automation solutions globally. Its main customer base is in the utilities sector. The high-performance, open and state-of-the-art solutions include Substation Automation Systems, Distribution Management Systems, Energy Management Systems and others. As many as 1,000 people are working globally for Open Systems.
The solutions provided by Open Systems as well as its expertise in transmission and distribution industries in the power sector add more value to Emerson Electric’s software offerings in the power generation industry. In all, the buyout will assist Emerson Electric’s customers (in the utilities and other industries) to digitize operations and thus help in the use of renewable energy sources and enhancing energy efficiency.
It is worth noting here that Open Systems will be integrated with Emerson Electric’s Automation Solutions segment. The division engages in providing valves, measurement and analytical instrumentation, actuators and regulators, process control systems and solutions, and industrial solutions. The segment’s revenues in third-quarter fiscal 2020 (ended Jun 30, 2020) were $2,589 million, representing 66.1% of total revenues generated by Emerson.
Emerson Electric’s Buyout Activities
The company believes in acquiring businesses to improve its product lines and market exposure. In the first nine months of fiscal 2020 (ended June 2020), it used $114 million for making acquisitions.
In February 2019, Emerson Electric acquired the Intelligent Platforms business of General Electric Company GE. The acquired business was integrated with the Automation Solutions segment. Also, in March 2020, Emerson Electric added Verdant top its portfolio, while American Governor Company was acquired in April 2020