Blackstone just announced a sizable deal with Emerson Electric
- Blackstone to take majority stake in Emerson's Climate Technologies business.
- Emerson also reported market-beating results for its fiscal Q4 on Monday.
- Shares of Emerson Electric Co are down about 5.0% versus the start of 2022.
Details of the agreement
The deal values that standalone business that focuses on HVACR products at $14 billion. Blackstone will pay about $9.5 billion upfront and another $2.25 billion note at close.
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Climate Technologies brought in $5.0 billion in net sales last year. According to Lal Karsanbhai:
This transaction enables Emerson to partially monetise its Climate Technologies business at an attractive valuation while enabling Emerson to participate in Climate Technologies’ upside potential upon exit of our non-controlling position.
Emerson will get to keep a 45% equity interest (non-controlling) in that business. Proceeds from this transaction, it confirmed, will be used for “M&A” and shareholder returns.
In August, the multinational also offloaded InSinkErator – its food-waste disposal business for $3.0 billion.
Emerson reports Q4 results
Emerson has already had its Board of Directors unanimously approve the transaction that will complete in the first six months of 2023. It’s yet to secure regulatory approval and satisfy other customary closing conditions, though. The press release added:
Cash consideration will be funded by $5.5 billion of fully committed debt financing and $4.4 billion of equity contribution from Blackstone. A subsidiary of ADIA and GIC will invest alongside Blackstone as part of the transaction.
Wall Street currently rates this stock at “overweight” and sees upside in it to about $100 a share – up another 15% from here.