By Nathan Gomes, Anirban Sen and David Carnevali
(Reuters) - U.S. industrial conglomerate Emerson (NYSE:EMR) Electric Co on Wednesday agreed to buy National Instruments (NASDAQ:NATI) Corp for $8.2 billion, capping a nearly yearlong pursuit of the measurement equipment maker.
The $60-per-share cash offer represents a premium of nearly 50% to National Instruments' closing price on Jan. 12, the day before it announced a strategic review. Austin, Texas-based National Instruments' shares rose nearly 10% to touch a record high of $57.65, while Emerson's shares fell more than 1% to $83.1.
Emerson, which had first approached National Instruments with an offer of $48 per share last May, beat out rival bidder Fortive (NYSE:FTV) Corp in a tightly contested process late on Tuesday, according to people familiar with the matter.
National Instruments extended the deadline for final bids several times over the past week, the sources said, requesting anonymity because the discussions were confidential.
Fortive also made a $60-per-share offer for National Instruments on Tuesday, the sources said, but the seller decided to pick Emerson due to lesser risks in financing the deal and a potentially easier path to regulatory approval.
Emerson is financing the deal primarily through a cash pile of $8 billion that it garnered through the divestment of its climate technologies unit to Blackstone (NYSE:BX) last year.
The acquisition is expected to bolster Emerson's efforts to reshape itself as a major global player in the automation industry. The deal will strengthen a key pillar of Emerson's strategy to build out its capabilities in the high-growth area of testing and measurement and allow it to tap National Instruments' software-connected automated systems as part of its profitability push.
"These capabilities provide Emerson industry diversification into attractive and growing discrete markets like semiconductor and electronics, transportation and electric vehicles," Emerson Chief Executive Officer Lal Karsanbhai said in a statement.
AUTOMATION FOCUS
St. Louis, Missouri-based Emerson has executed a string of deals over the last few years to streamline itself into an industrial automation provider.
In 2021, Emerson merged its software units with smaller rival Aspen Technology (NASDAQ:AZPN) as part of its industrial automation push.
National Instruments launched a formal sale process in January after Emerson threatened to challenge its board if it did not engage in deal negotiations. Emerson dropped its hostile bid once an auction for National Instruments got underway.
Bloomberg first reported about the talks advancing between Emerson and National Instruments on Tuesday. Reuters first reported in March that Emerson, Fortive and Keysight were through to the final round of bidding for National Instruments, after breaking news of Emerson's interest in January.
The deal is expected to close in the first half of Emerson's fiscal 2024.
Goldman Sachs & Co (NYSE:GS) LLC and Centerview Partners LLC were financial advisers to Emerson on the deal, while Davis Polk & Wardwell LLP was its legal adviser. BofA Securities and Wachtell, Lipton, Rosen & Katz advised National Instruments.