Diversified technology company
Emerson Electric Co.
) recently inked a deal with Platinum Equity to sell 51% stake in
its embedded computing and power business. This all-cash deal is
valued at approximately $300 million and Emerson plans to retain
49% non-controlling stake in the business. The transaction aims
at boosting shareholders' wealth and is expected to close in a
span of three to six months after gaining regulatory
Platinum Equity is a global leader specializing in the
merging, acquisition and operation of companies and has completed
more than 150 acquisitions. It serves a wide range of business
markets including information technology, telecommunications,
logistics, metals services, manufacturing and distribution.
According to the agreement, the embedded computing and power
business will continue to operate as an independent company after
the divesture. Once the transaction is complete, Emerson intends
to use the equity method of accounting to report sales and
earnings generated from the separate entity. However, sales and
earnings figures from the embedded computing and power business
will be reported in Emerson's upcoming fiscal 2013 results.
Based in California, Emerson's embedded computing and power
business is a major provider in the design and supply of
technologies used in communication as well as computing equipment
and other applications. The business generated revenues of $1.4
million in fiscal 2012.
However, Emerson believes that this technology leader no
longer strategically fits in its portfolio. The company cited
weaker demand from the technology equipment and mobile device
markets as one of primary reasons for the divesture. Through this
divestment, Emerson plans to focus more on its core business.
Emerson believes that Platinum Equity has the required skills and
expertise to give the business a competitive edge.
Moving forward, Emerson will continue to benefit from
Platinum's strategies to position the embedded computing and
power business as a strong and innovative competitor in the
Emerson currently carries a Zacks Rank #3 (Hold). Other
companies that are worth considering at present include
Alamo Group, Inc.
CECO Environmental Corp.
Calgon Carbon Corporation
). While Alamo and CECO carry a Zacks Rank #1 (Strong Buy),
Calgon has a Zacks Rank #2 (Buy).
ALAMO GROUP INC (ALG): Free Stock Analysis
CALGON CARBON (CCC): Free Stock Analysis
CECO ENVIRNMNTL (CECE): Free Stock Analysis
EMERSON ELEC CO (EMR): Free Stock Analysis
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