Emerson merges software units with 'industrial AI' for oilfields firm AspenTech in $11bn deal

Yes the same mega-org at centre of Facebook data centre trade secrets spat


Mega conglomerate Emerson will buy a majority stake in asset optimisation software biz AspenTech and merge its software units with the firm in an $11bn deal.

Under the terms, Emerson will combine its industrial software arms – OSI Inc and Geological Simulation Software – into AspenTech.

AspenTech makes industrial software for the pharmaceutical, engineering, metals and mining industries. Among its software is code that helps oil and gas companies simulate potential impacts of drilling and other work on oil fields. It describes this on its website as "industrial AI".

As for Emerson, the conglomerate has arms for power, process, climate control, and industrial automation and process control software as well as appliances and tools. It reported annual revenues [PDF] for 2020 of $16.785bn, down from $18.372bn the year before, and pre-tax profit of $2.335bn down from $2.859bn.

"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," Lal Karsanbhai, president and CEO of Emerson, said in a canned statement.

"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."

The enlarged AspenTech will have over 3,700 employees and is expected to record FY22 annual revenues of $1.1bn, with a business model predicated on 86 per cent software and 14 per cent services sales. The merger has a total equity value of $11bn, and Aspen will see $6bn of that in cash.

Emerson sold its Network Power business to Platinum Equity and a group of co-investors in 2016 for a whopping $4bn, although it still retains a stake in the biz, which looks after power supplies to data centres, among other things, and is now known as Vertiv.

Antonio Pietri, president and CEO of AspenTech, will lead the new AspenTech once the deal closes.

The firms expect to close the sale in the second quarter of 2022 – though Aspen shareholders still have to give the thumbs-up and other regulatory hurdles must be passed. ®

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