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Emerson Electric Plans $11 Billion Software Division Merger With Aspen Tech

Emerson will merge its software businesses with smaller rival Aspen Technology in a deal worth around $11 billion, the companies said Monday.

Emerson Electric  (EMR) - Get Emerson Electric Co. Report unveiled plans Monday for an $11 billion merger with Aspen Technology  (AZPN) - Get Aspen Technology, Inc. Report that the pair said will accelerate growth their combined growth in the industrial software sector. 

Aspen Technology shareholders will get $87 in cahs, as well as 0.42 shares of the combined group, called 'new AspenTech', giving them a collective 45% stake. 

Emerson will also pay around $6 billion for a 55% stake in the combined entity, which it says will be a "diversified, high-performance industrial software leader with greater scale, capabilities and technologies."

Collectively the deal is worth around $160 per Aspen Technology share, the companies said.

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Alongside the deal, Emerson also reaffirmed its fiscal 2021 profit guidance, which sees adjusted earnings in the region of $4.06 to $4.08 per share, with underlying sales growing between 5% and 6%.

“We saw an attractive opportunity to accelerate our software strategy to capitalize on the rapidly evolving industrial software landscape and advance Emerson’s high value portfolio journey,” said Emerson CEO Lal Karsanbhai. “Our customers are increasingly seeking partners to help realize stronger performance as they automate workflows in their facilities to optimize operations. New AspenTech will become an engine for both acquisition and organic growth.”  

Emerson shares were marked 0.9% lower in pre-market trading Monday to indicate an opening bell price of $95.75 each. Aspen Technology shares, meanwhile, leapt 9.5% to $155.00 each. 

“The new AspenTech will benefit from a larger and more diversified market, which we will be able to serve with a comprehensive software portfolio, an expanded global sales channel and an even stronger balance sheet reinforced by Emerson," said Aspen Technology CEO Antoni Pietri. "Additionally, this transaction expands our ability to support customers’ global sustainability ambitions.”