Global manufacturing and technology company Emerson announced the divestment of two businesses on Tuesday — Emerson Network Power and Leroy-Somer and Control Technologies — for a combined $5.2 billion.
Emerson has agreed to sell its Network Power business to Platinum Equity and a group of co-investors in a deal valued at $4 billion. The transaction is expected to close by Dec. 31.
With 2015 revenue of approximately $4.4 billion, Columbus, OH-based Network Power is a provider of thermal management, A/C and D/C power, transfer switches, services and information management systems for the data center and telecommunications industries.
Leroy-Somer and Control Techniques — Emerson's motor and electric power division — will be sold to Nidec Corporation in a deal valued at $1.2 billion and expected to close by Dec. 31. France-based Leroy-Somer was acquired by Emerson in 1990. U.K.-based Control Techniques has been an Emerson business since 1995. For more than 30 years, Leroy-Somer and Control Techniques have supplied alternators, drives and motors, with approximately 9,500 employees around the world. The two businesses had combined 2015 revenue of approximately $1.7 billion.
The moves coincide with Emerson saying last year that it planned to divest its network power business and explor alternatives for its motors and drives, power generation and storage units.
Emerson also reported its 2016 fiscal third quarter results, led by a 7 percent year-over-year decline in sales to $5.13 billion, while profit of $479 million was down from $564 million a year earlier. The company attributed the declines to slowing demand in its end markets due to uncertain global economic conditions. Emerson's process management unit — which accounts for more than one-third of the company's total sales — saw revenue drop by 13.4 percent from a year earlier.
In Emerson's other segments:
- Industrial Automation Q3 sales were down 11 percent year-over-year, with organic sales also down 11 percent. Emerson said the results reflect weakness in general industrial spending and upstream oil and gas. Organic sales were down in all regions except Europe, which was up 1 percent.
- Network Power Q3 sales increased 8 percent year-over-year, with organic sales up 10 percent. Organic sales in North America were up 16, percent reflecting strong growth in telecommunications power systems.
- Climate Technologies Q3 sales decreased 2 percent year-over-year, with organic sales down 1 percent. Organic sales in North America were up 2 percent.
- Commercial & Residential Solutions Q3 sales decreased 16 percent, with organic sales down 1 percent as the prior year divestiture of the commercial storage business deducted 15 percent.