Quickie: Emerson buying AspenTech? Not so fast!

Oct 7, 2021 | Hot Topics

Bloomberg last night published a note that said that

Emerson Electric Co. is in talks over a combination with Aspen Technology Inc. to create an industrial software giant, according to people with knowledge of the matter.

Emerson is discussing a deal to merge its software assets with Aspen Tech and gain majority control of the combined entity for its shareholders … No final decisions have been made and talks may fall apart.

…. and investors sent AspenTech’s share price up 8% in after-hours trading.

The article further mused that Emerson would merge its software assets with AspenTech’s — a lot like Schneider Electric and AVEVA did a few years ago — and that AspenTech would remain a publicly traded company (again, like AVEVA).

Deal specifics aside, we’ve heard before that AspenTech has been “exploring its options” — investor-speak for “make me an offer”. And Emerson has been mentioned a lot as a possible suitor since a combination makes logical sense. Emerson makes factory automation control systems, is already installed in many of the chemical and other process facilities designed using AspenTech’s solutions — and its push into asset management software dovetails with Emerson’s approach. And, not unimportant: Emerson is far more diverse than AspenTech, which gets a significant chunk of its revenue from oil and gas.

But just because something makes sense, doesn’t mean it will happen. As the article noted, “talks may fall apart.” One thing these news alerts often do is place pressure on all concerned to reach a deal, and also notifies anyone who might be remotely interested to get in there and pitch an offer. We’ve been here before — there’s no real reason (unless you speculate in stocks) to get excited.

Should this come to pass it would be interesting to see how an Emerson+AspenTech competes against a Schneider+AVEVA and against a Hexagon, which just completed its acquisition of Infor’s EAM, asset management, business. (Hexagon has also often been mentioned as a possible merger candidate for AspenTech but wasn’t mentioned in the Bloomberg article.)