Rockwell Automation Inc. rejected a third takeover offer from Emerson Electric Co. Wednesday morning, saying the unsolicited proposal undervalued the company and Rockwell is better off on its own.
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Last week Emerson sweetened its takeover offer to $225 per share, valuing the company at about $28.91 billion, in a bid to create a machine and software manufacturing giant. Rockwell said that based on Emerson's closing price Friday, the offer was worth about $218 per share, or a 17% premium to Rockwell's stock price before Emerson began its public pursuit of of the company. Rockwell previously rebuffed offers of $200 per share and $215 per share, and refused to engage in negotiations, according to people familiar with the matter.
In a letter to Emerson Chief Executive David Farr, Rockwell Chief Executive Blake Moret said the company thoroughly considered the offer with advisers and unanimously decided that the proposal was not in the best interests of the company or its shareholders.
"While Emerson may see this proposed acquisition as necessary to enhance its growth and earnings potential and expand its capabilities in the industrial automation and information market, Rockwell Automation does not," the letter read.
Mr. Moret also said Emerson's offer creates long-term risks for the company and that a combined company might struggle to compete in a quickly changing market.
A representative from Emerson was not immediately available to comment, but the company has previously said it believes that putting the companies together would create a new powerhouse in the production of equipment and software used to control automated manufacturing processes.
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The companies have complementary product lines and geographies, and Emerson believes that combining them would accelerate their growth. Rockwell's strength is in so-called discrete products used in areas including auto assembly, packaging and printing, while Emerson excels in so-called process control for power plants, oil-and-gas facilities and the like.
Rockwell shares fell 1% to $191.05 during premarket trading while Emerson shares were little changed.
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Corrections & Amplifications
This item was corrected at 11:31 p.m. ET to show that Rockwell Automation said that based on Emerson Electric's closing share price on Nov. 17, its offer for Rockwell was worth about $218 per share. The original incorrectly reported last week's offer worth $225 a share.
Rockwell Automation said that based on Emerson Electric's closing share price on Nov. 17, its offer for Rockwell was worth about $218 per share. "Rockwell Automation Rejects Third Proposal From Emerson," at 7:43 and 8:04 ET, reported in the second paragraph that the Emerson offer was worth $225 a share, the value when the offer was made last week, but didn't include the updated figure. (Nov. 22)
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November 22, 2017 11:45 ET (16:45 GMT)