Emerson – Emerson Completes Acquisition of NI, Advancing Global Automation Leadership

Emerson

NI to become new Test & Measurement segment within Emerson

 

ST. LOUIS (October 11, 2023) – Emerson (NYSE: EMR) today announced it has closed its acquisition of NI (Nasdaq: NATI), a leading provider of software-connected automated test and measurement systems, at an equity value of $8.2 billion.

The acquisition of NI advances Emerson’s position as a global automation leader and expands its opportunity to capitalize on key secular trends like nearshoring, digital transformation, and sustainability and decarbonization. NI brings a portfolio of software, control and intelligent devices that is expected to accelerate Emerson’s revenue growth aligned to its 4-7% through the cycle organic growth target. NI increases Emerson’s end market exposure in discrete markets, which will be Emerson’s second largest industry segment, and with approximately 20% of sales in software, NI also increases Emerson’s exposure to high-growth industrial software markets. NI increases Emerson’s gross profit, with further adjusted EBITA margin expansion opportunities as Emerson delivers an expected $165 million of cost synergy opportunities by the end of year 5 through application of best practices from the Emerson Management System.

“Our acquisition of NI is a significant milestone in our efforts to transform Emerson and realize our vision of increasing growth, cohesiveness and end market diversification across Emerson’s portfolio,” said Emerson President and Chief Executive Officer Lal Karsanbhai. “We are pleased to welcome NI employees to Emerson and benefit from our shared visions and cultures, including our mutual commitment to innovation, operational excellence and sustainability. Together, we look forward to providing our customers more innovative and differentiated products, executing on our synergy targets and delivering increased shareholder value.”

 

NI will become a new reported segment within Emerson called Test & Measurement and will be consolidated into the Software and Control group. The Test & Measurement business will continue to be headquartered in Austin, Texas. NI reported $1.66 billion in 2022 revenue and operates in more than 40 countries, serving approximately 35,000 customers across high-growth semiconductor and electronics, transportation and aerospace and defense markets.

Ritu Favre has been appointed to lead the Test & Measurement segment as Business Group President. Ms. Favre joined NI in 2019 as Senior Vice President and General Manager of the semiconductor business and was promoted to Executive Vice President of Business Units in 2022, where she was responsible for driving growth across the semiconductor and electronics; aerospace, defense and government; transportation; and portfolio business units. She brings more than 30 years of technology experience to Emerson, with deep customer relationships and expertise on the emerging innovations and technologies driving electronic test and measurement forward.

“I am excited to lead Emerson’s newly formed Test & Measurement business group and build on NI’s strong foundation as we drive synergies, continue to enhance growth and profitability, and help to execute on Emerson’s strategy as an automation leader,” said Ms. Favre. “With a deep bench of talent, an impressive roster of customers and our strong combined innovation engine, we are well positioned to work closely with Emerson’s broader business to enhance our ability to solve our customers’ toughest test and measurement challenges.”

 

As a result of the transaction’s closing, NI’s common stock has ceased trading on the Nasdaq.

 

Advisors
Goldman Sachs & Co. LLC and Centerview Partners LLC served as financial advisors to Emerson and Davis Polk & Wardwell LLP served as legal advisor. BofA Securities served as exclusive financial advisor to NI and Wachtell, Lipton, Rosen & Katz served as legal advisor.

SourceEmerson

EMR Analysis

More information on Emerson: See the full profile on EMR Executive Services

More information on Lal Karsanbhai (President and Chief Executive Officer, Emerson): See the full profile on EMR Executive Services

More information on Mike Baughman (Senior Executive Vice President and Chief Financial Officer and Chief Accounting Officer​, Emerson): See the full profile on EMR Executive Services

More information on Ritu Favre (Business Group President, Leader of the Test & Measurement Segment, Emerson): See the full profile on EMR Executive Services

 

More information on NI (National Instruments) by Emerson: https://www.ni.com/en-us.html  + For more than 40 years, NI has developed automated test and automated measurement systems that help engineers solve the world’s toughest challenges. Let’s work together to find creative solutions to help your organization succeed today, tomorrow, and for the next 100 years.

NI had $1.66 billion in 2022 revenue and operates in more than 40 countries, serving approximately 35,000 customers across semiconductor and electronics, transportation, and aerospace and defense markets.

NI will become a new reported segment within Emerson called Test & Measurement and will be consolidated into the Software and Control group.

More information on Eric Starkloff (President and Chief Executive Officer, NI): https://www.ni.com/en-us/about-ni/leadership/starkloff.html + https://www.linkedin.com/in/ericstarkloff/ 

More information on Karen Rapp (Executive Vice President and Chief Financial Officer, NI): https://www.ni.com/en/about-ni/leadership.html + https://www.linkedin.com/in/karen-rapp-3572131/

 

 

 

EMR Additional Notes: 

  • Nearshoring:
    • Nearshoring describes the process to offshore some business activities to geographically close destinations.
    • Nearshoring happens when an organization decides to transfer work to companies that are less expensive and geographically closer. Using this model allows businesses to move their operations to a closer, more cost-effective location.

 

  • Carbon Dioxide (CO2):
    • Primary greenhouse gas emitted through human activities. Carbon dioxide enters the atmosphere through burning fossil fuels (coal, natural gas, and oil), solid waste, trees and other biological materials, and also as a result of certain chemical reactions (e.g., manufacture of cement). Carbon dioxide is removed from the atmosphere (or “sequestered”) when it is absorbed by plants as part of the biological carbon cycle.
  • Decarbonization:
    • Reduction of carbon dioxide emissions through the use of low carbon power sources, achieving a lower output of greenhouse gasses into the atmosphere.

 

  • Industrial Automation:
    • Industrial automation is the use of technologies such as computer software and robotics to control machinery and processes which replace human beings in performing specific functions. The functions are primarily centered on manufacturing, quality control and material handling processes.
      • Fixed Automation:
        • Fixed automation systems are utilized in high volume production settings that have dedicated equipment. The equipment has fixed operation sets and is designed to perform efficiently with the operation sets. This type of automation is mainly used in discrete mass production and continuous flow systems like paint shops, distillation processes, transfer lines and conveyors. All these processes rely on mechanized machinery to perform their fixed and repetitive operations to achieve high production volumes.
      • Programmable Automation:
        • Programmable automation systems facilitate changeable operation sequences and machine configuration using electronic controls. With programmable automation, non-trivial programming efforts are required to reprogram sequence and machine operations. Since production processes are not changed often, programmable automation systems tend to be less expensive in the long run. This type of system is mainly used in low job variety and medium-to-high product volume settings. It may also be used in mass production settings like paper mills and steel rolling mills.
      • Flexible Automation:
        • Flexible automation systems are utilized in computer-controlled flexible manufacturing systems. Human operators enter high-level commands in the form of computer codes that identify products and their location in the system’s sequence to trigger automatic lower-level changes. Every production machine receives instructions from a human-operated computer. The instructions trigger the loading and unloading of necessary tools before carrying out their computer-instructed processes. Once processing is completed, the end products are transferred to the next machine automatically. Flexible industrial automation is used in batch processes and job shops with high product varieties and low-to-medium job volumes.
      • Integrated Automation:
        • Integrated industrial automation involves the total automation of manufacturing plants where all processes function under digital information processing coordination and computer control. It comprises technologies like:
          • Computer-aided process planning
          • Computer-supported design and manufacturing
          • Flexible machine systems
          • Computer numerical control machine tools
          • Automated material handling systems, like robots
          • Automatic storage and retrieval systems
          • Computerized production and scheduling control
          • Automated conveyors and cranes
        • Additionally, an integrated automation system can integrate a business system via a common database. That is, it supports the full integration of management operations and processes using communication and information technologies. Such technologies are utilized in computer integrated manufacturing and advanced process automation systems.
  • Process Automation / Manufacturing:
    • Process automation is defined as the use of software and technologies to automate business processes and functions in order to accomplish defined organizational goals, such as producing a product, hiring and onboarding an employee, or providing customer service.
    • Process manufacturing utilizes chemical, physical and compositional changes to convert raw material or feedstock into a product. Process manufacturing includes industries such as cement and glass, chemicals, electric power generation, food and beverage, life sciences, metals and mining, oil and gas, pulp and paper, refining, and water and wastewater. Process manufacturing includes both continuous and batch processes.
  • Discrete Automation / Manufacturing:
    • Discrete automation is the production of parts that are of a quantifiable nature. That may include cell phones, soda bottles, automobiles, airplanes, toys, etc. As you know, an automobile contains many, many parts. The parts required for an automobile are also quantifiable in nature.
    • Discrete manufacturing processes include the production of individual parts as well as their assembly into a final product. Discrete manufacturing examples include automobiles, appliances, and consumer electronics.
  • Hybrid Automation / Manufacturing:
    • The Hybrid Automation Method follows two guiding principles: Implementing robust automation solutions that are easy and affordable for organisations to maintain. Realising process efficiency rapidly by reducing project overheads and time-to-value.
    • Hybrid manufacturing is a combination of additive manufacturing (AM) and subtractive manufacturing within the same machine.
  • Additive Manufacturing:
    • Additive manufacturing is the process of creating an object by building it one layer at a time. It is the opposite of subtractive manufacturing, in which an object is created by cutting away at a solid block of material until the final product is complete.
    • Operators across a variety of different manufacturing industries utilize additive manufacturing in various ways. For instance: Medical device manufacturers use 3D printing to develop high variance products such as dental implants.
    • The term “additive manufacturing” refers to the creation of objects by “adding” material. Therefore, 3D printing is a form of additive manufacturing. When an object is created by adding material — as opposed to removing material — it’s considered additive manufacturing.