By Dhirendra Tripathi
Investing.com – Emerson (NYSE:EMR) stock fell by 1.7% in Monday’s premarket trading on the company’s plan to merge two of its software businesses with AspenTech (NASDAQ:AZPN) in an $11-billion deal.
The deal that will see $6 billion cash going out from Emerson to AspenTech shareholders got a muted response from the former’s shareholders. Aspen stock traded 4.6% higher at $141.55 in premarket.
The aim of the deal is to provide a fuller suite of services to a wide range of industry verticals at a time when most of big companies, from energy to chemicals, are committing billions of dollars in investment to meet booming deamnd.
The transaction, comprising cash and stock, values each AspenTech share at $160, a premium of 13% to its Friday close.
AspenTech shareholders will receive approximately $87 per share in cash and 42 cents of stock of the merged entity for each share of AspenTech they own.
Upon completion of the transaction, expected to happen by June, Emerson will own 55% of the new AspenTech on a fully diluted basis and AspenTech shareholders will own 45%.
Emerson President and Chief Executive Officer Lal Karsanbhai said Aspen will be used for both acquisition and organic growth. New AspenTech is expected to have FY22 annual revenue of $1.1 billion.
The new AspenTech will derive 86% of pro forma revenue from software and 14% from services.
Emerson reiterated its annual underlying sales guidance of around 5.5%.