Rockwell Automation rejects takeover bid

Rockwell Automation Inc. has rejected an unsolicited takeover bid from Emerson Electric because the offer was not in Rockwell’s interest, the company said Tuesday.

Milwaukee-based Rockwell confirmed that it received two offers from Emerson, a $14.5 billion St. Louis-based company with 81,000 employees and a large presence in the automation controls industry.

Emerson this month offered $215 per share in cash and stock, or roughly $27.61 billion. In August, it made a bid of $200 per share.

Now, Emerson said, the talks between the companies are off.

In a statement, Rockwell said: “The Rockwell Automation Board of Directors unanimously determined that each of Emerson’s proposals was not in the best interest of Rockwell Automation or its shareowners.”

Rockwell is a $6 billion company with 22,000 employees worldwide, including about 1,500 in Milwaukee. It is the sixth-largest of 16 Fortune 1000 companies headquartered in the Milwaukee area, according to the Metropolitan Milwaukee Association of Commerce.

Rockwell and Emerson have products in a wide range of industries, including oil and gas production and food and beverage equipment. Emerson is the parent of Racine-based Insinkerator, a global manufacturer of garbage disposal systems.

It’s not surprising that Emerson would have wanted Rockwell, said

analyst Richard Eastman with Milwaukee-based Robert W. Baird & Co. Inc.

“I think what Rockwell is doing, strategically and operationally, has been very good for shareholders and for Rockwell itself if you look at market share and technology leadership,” Eastman said.

Rockwell didn’t stand to benefit from the deal, according to Eastman.

“I guess I would just step back and say if Emerson were to purchase Rockwell, what would Emerson bring to the table to help Rockwell grow their business? I don’t see any value enhancement by partnering up or being bought by Emerson,” Eastman said.

Rockwell raised multiple arguments against being acquired by Emerson, including technology reasons, according to the investment research firm Vertical Research Partners.

“Rockwell argues its common (technologies) platform is key to its commercial success and trying to combine that with Emerson’s multiple offerings would create customer disruptions and be expensive. Rockwell also argues that multiple platforms are exactly what customers don’t want,” Vertical Research said.

Emerson has had its “fair share of struggles and capital allocation miscues,” Vertical Research said.

“We believe the concerns Rockwell raises are fair and valid, but ultimately with careful execution they are surmountable,” the firm said.

“In short, Rockwell is making a strong argument against a combination with Emerson on commercial grounds that has nothing to do with valuation. We do agree that Emerson needs Rockwell much more than Rockwell needs Emerson. In fact, Rockwell probably does not need Emerson at all.”

Rockwell has strong ties with Foxconn Technology Group, the Taiwanese electronics giant that intends to employ up to 13,000 people at a proposed factory in Mount Pleasant in Racine County.

Foxconn and Rockwell also have large operations in China.

“As the second-largest single-country market right after the United States, China is a strategically important market for us,” Joe Sousa, Rockwell’s Asia-Pacific president, recently told the publication ChinaDaily.com

In Milwaukee, Rockwell is very important as a leader in manufacturing technology, said Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce.

“I think it’s a company that is synonymous with Milwaukee and our manufacturing heritage,” Sheey said.

“To have a thought leader on manufacturing technology stay headquartered here and be independent is a good thing,” he said.

In heavy trading, Rockwell shares closed Tuesday at $200.82, up more than 7%.

Emerson shares closed at $64.46, down about 4%.