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Emerson Buys Food Monitoring Firms Locus Traxx, PakSense

Emerson Electric Co. EMR has taken a significant step to expand its global capabilities in fresh food monitoring, with the acquisitions of Locus Traxx and PakSense. These buyouts will enable Emerson to widen the scope of its cargo solutions.

The financial details of the deals were kept under wraps.

The two acquired companies offer temperature monitoring solutions that aid firms to monitor food, perishable goods and high-value shipments across the entire supply chain. They will assist Emerson in facilitating steady and safe control of food and other temperature-sensitive goods.

Locus Traxx is based in Jupiter, FL, and delivers real-time temperature loggers, which can be supervised anytime and anywhere, using cloud-based analytics. On the other hand, PakSense - headquartered in Boise, ID - offers diverse temperature monitoring solutions, suitable for a broad range of shipments and cost/benefit settings. These firms ensure that only the freshest and safest products reach consumers.

Emerson is already a leading player in the global container shipping and food retail industries. It will include the two new firms in a newly-created unit focused on cargo-based solutions.

These acquisitions will allow Emerson to deal with the challenges faced by end users in the agriculture, transport and retail industries to keep their products fresh. The new, extensive solution covers the whole fresh food process, right from grower to retailer, and demonstrates Emerson's responsiveness to the needs of its customers.

Emerson has partnered with leading shipping companies, trucking lines and refrigerated container manufacturers for a long time, and offers advanced technology and services to safeguard cold chain assets.

EMERSON ELEC CO Price and Consensus

EMERSON ELEC CO Price and Consensus | EMERSON ELEC CO Quote

At present, the company is undergoing a deep restructuring phase. Earlier this month, Emerson announced that it has inked an agreement to purchase Pentair Valves & Controls, a business unit of Pentair plc. This takeover is part of the company's diligent portfolio repositioning strategy that began in 2015 to drive efficiency and growth.This $3.15 billion proposed acquisition comes close on the heels of the company's announcement of divesting its Network Power, Leroy-Somer and Control Techniques businesses.

In its recent earnings report, Emerson lowered its fiscal 2016 revenue and earnings estimates as it continues to struggle with difficult business conditions. Also, in light of its planned divestitures, Emerson stands to lose over $6 billion in annualized sales, which will shrink its revenue base significantly.

Business investments growth has also been negative for the last nine months and the company expects this trend to continue till 2017, adding to its concerns. Given such tough economic conditions and dwindling order numbers, the company anticipates underlying sales to be down 5-6% in the fiscal. Moreover, stiff competition and rising restructuring expenses may affect its financials in the near term.

We expect Emerson's performance to remain under pressure in the coming quarters, as it contends with critical headwinds including sustained weak global economic circumstances, depressed industrial spending along with soft emerging and mature economies.

Emerson currently has a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the same space include Franklin Electric Co., Inc. FELE , AO Smith Corp. AOS and EnerSys ENS , each carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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