Avocent Shares Surge on $1.2B Emerson Bid

Updates share prices

HUNTSVILLE, Ala. (TheStreet) -- Shares of Avocent(AVCT) surged Tuesday on news of Emerson Electric Co.'s(EMR) $1.2 billion offer to buy the company.

Avocent's stock rose $4.32, or 21.1%, to $24.84 in early trading, as investors warmed to the $25-per-share all-cash offer, which has already been approved by the software maker's board. Emerson's shares also moved upwards, albeit modestly, gaining 57 cents, or 1.5%, to reach $39.25, as the Nasdaq gained 1.2%.

Manufacturing and services giant Emerson will use Avocent to boost its data center management story, and says that the deal will create significant growth opportunities. Avocent sells software for managing and monitoring IT systems and other data center kit, something which is becoming increasingly important as companies wrestle with spiraling energy costs.

"Combining Avocent's technologies, relationships and installed base with Emerson's power and cooling presence allows us to offer a more compelling solution to our data center customers' most pressing challenge -- energy efficiency," said David Farr, Emerson CEO, in a statement released before market open.

The deal is expected to close in January 2010, at which time Avocent will be absorbed into Emerson's Network Power division, which focuses on customers' energy and cooling systems. With data centers packed to the rafters with power-hungry servers, utility costs are putting a major dent into firms' bottom lines, and many are rethinking their energy strategies.

The New York Stock Exchange(NYSE), for example, is in the throes of a green-tech revolution that will shave tens of millions of dollars a year off its operating expenses.