By Greg Roumeliotis
(Reuters) - U.S. factory automation equipment maker Emerson Electric Co (N:EMR) has made an offer to acquire pump manufacturer Pentair Plc's (N:PNR) troubled valves and controls division, according to people familiar with the matter.
Such a deal would free Pentair from a unit that its chief executive Randy Hogan has called a laggard when it comes to generating cash, while allowing Emerson to expand within its core sectors as it seeks to shed its network power and motors and drives businesses.
Pentair has received offers for the valves and controls business from companies other than Emerson, and there is no certainty that it will agree to any deal, the people said. The unit for sale could be valued at around $2 billion, the people added.
The sources asked not to be identified because the negotiations are confidential. Emerson and Pentair declined to comment.
Pentair inherited its valves and controls business as part of its $10 billion all-stock merger with Tyco International Ltd's (N:TYC) flow control unit in 2012.
Its fittings are used in machinery in the chemical, power generation, oil and gas and power generation sectors. As a result, it has suffered from the commodities-driven downturn in the mining and energy industries.
Pentair has responded by slashing costs, letting more than 2,000 employees go in the last year, and hiring a new executive to lead the unit. The company has been under pressure since last year from activist hedge fund Trian Fund Management LP to improve its performance.
Emerson announced last summer it would seek to spin off its network power division, which provides equipment and services that stop mission-critical systems from failing including surge prevention, uninterruptible power supplies and precision cooling. It has since said it is also considering a sale of that business.
The remaining non-core businesses that Emerson has been looking to sell include its motors, drives and remaining storage businesses.
Emerson could announce its final decision on the fate of these businesses in the coming weeks, according to the sources.
Emerson Chief Executive David Farr told analysts on the company's second-quarter earnings conference call in May that he could spend billions of dollars in cash on acquisitions in the second half of 2016.
"If we could pick up a couple billion dollars worth of things, then we would be very excited about that," Farr said.